Despite his firm defense of his call that the U.S. economy entered into another recession in July this year, Lakshman Achuthan of the Economic Cycle Research Institute (ECRI) continued to be scorned by his critics. Joe Calhoun, writing in his letter to Alhambra Investment Partners’ clients on Sunday, December 9, said that although Lakshman Achuthan of ECRI “has a flawless record of predicting US recessions … there is one problem with his call: he’s been making it for over a year now … the jury is still out.”
Today the jury came in: The National Federation of Independent Business issued its Optimism Index and noted that it decreased an astonishing 5.6 points to 87.5, the lowest reading since March of 2010 and the biggest monthly drop going back to 1986. Additionally, eight of the measure’s 10 components also dropped, confirming that the slowdown is being felt across nearly every facet of the 733 businesses surveyed for the November index.
The drop exceeded the 5.4-point decrease that was reported in October 2008 following the collapse of Lehman Brothers and the 5.2-point decline in September, 2001, following the terrorist attacks on the World Trade Center.
In its press release, the NFIB noted that data from Hurricane Sandy had been removed to avoid skewing the numbers, but the remaining data “makes clear that the election was the primary cause of the decline in [small business] owner optimism.” Said NFIB’s chief economist Bill Dunkelberg, author of the report:
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