- Lakshman Achuthan and Anirvan Banerji, cofounders of the Economic Cycle Research Institute, warn that a recession is on the horizon
- They write in an op-ed for CNN that the US economy is following a similar trajectory to the months leading up to the Great Recession
- They also say the Biden administration’s efforts to quash an economic downturn came too late
- It spells bad news for the president, who has tried to downplay the risks of a recession
Leading economists are warning that a recession is coming in the near future, despite the Biden administration’s attempts to downplay the risks.
Lakshman Achuthan and Anirvan Banerji, cofounders of the Economic Cycle Research Institute — which determines recession dates for 22 global economies — say the United States is on track to face another recession like the one in 2008.
They said in an op-ed for CNN that the Biden administration’s efforts to quash an impending economic downturn have come too late.
And even though the GDP grew in the last quarter of 2022 and the economy added more jobs, Achuthan and Banerji say that will soon change.
Lakshman Achuthan and Anirvan Banerji, cofounders of the Economic Cycle Research Institute — which determines recession dates for 22 global economies — warn that a recession is coming in the near future
The Economic Cycle Research Institute has been predicting a recession since last spring, and Achuthan and Banerji say that prediction has not changed despite the Federal Reserves’ efforts to raise interest rates.
They explain: ‘By the time the Fed began hiking rates, the economy was already slowing, making recession more likely.’
Achuthan and Banerji said the goods sector is particularly vulnerable because it is sensitive to the rising interest rates, which increases the cost of borrowing for many families,
Last month, the Fed raised its benchmark rate by half a percentage point, still double the usual move but not as huge as the last four hikes it has made, which were all three-quarters of a percentage point.
As a result, orders from US factories have declined and — under the strain of rising mortgage rates — residential construction has plummeted.
At the same time, the economists write, the Purchasing Managers’ Index for Manufacturing, which measures the month-over month change in manufacturing activity, fell by more than half over the past two months.
In its release last month, Timothy R. Fiore, chair of the Institute for Supply Management, said: ‘This is the second month of contraction, and as predicted, will likely be the norm for the PMI at least through the first quarter of 2023, with the PMI expected to be between 48 and 52 percent.’
A similar index for the services industry also fell below 50 last month, suggesting that services activity has started to decline as well.
And while falling Growth Domestic Products and rising unemployment are sure signs of a recession, Achuthan and Banerji write that: ‘While GDP and jobs do move in step with the economy, by the time they are released, they only tell us where the economy had been in the recent past.’
‘Employment, in particular, can hold up longer than expected in a recessionary scenario.
‘That was true in the inflationary era around the 1970s. Most notably, unemployment didn’t peak until eight months after the start of the severe 1973-1975 recession.’
The Biden administration has not yet released its December jobs report, but in November, the US added 263,000 jobs as unemployment held steady at 3.7 percent.
But Achuthan and Banerji said the reason many companies may not be laying off their employees yet is due to a so-called ‘money illusion,’ in which business owners tend to view revenue in real-dollar amounts rather than adjusting for inflation.
When adjusted for inflation, the economists write, revenues typically fall in a recession as customers make fewer or smaller purchases.
It also forces business owners to pay more for everything they buy, squeezing their profits and leading to layoffs.
That is what happened in 2008, Achuthan and Banerji said, ‘when many — including then-President George W. Bush — were not concerned about a recession because [the] GDP hadn’t declined yet, even though job losses had begun.
‘We pushed back against the prevailing complacency, writing for CNN at the time: “While GDP has yet to decline, we have already seen four straight months of payroll job losses. That suggests that the economy is on a recession track.
“And it implies that either one or both of the recent, slightly positive GDP estimates will be revised down to negative readings by next year.”
The economists concluded by writing: ‘Our recession forecasts haven’t wavered.
‘We should all be prepared.’
Biden uses his lawyers to find his classified docs — to shield from the FBI
Strange Biden did not use security officers or the FBI to conduct further searches
The discovery of a fourth set of classified documents, at the Biden residence in Delaware, has further undermined the White House’s virtual mantra that the president “takes classified documents very seriously.”
Putting aside the repeated movement of highly classified documents over six years, one curious element has emerged in this scandal: the use of private counsel.
Not only did President Joe Biden enlist lawyers to clear out his private Washington office; he then used them — rather than security officers or the FBI — to search for additional classified documents.
The initial use of lawyers is notable. While it seems a fairly pricey moving crew, Biden could argue a trove of documents might require a judgment on where they should be sent and whether they belong to Biden, the Penn Biden Center or the government.
But why was a legal team sent in six years after Biden took the documents on leaving as vice president? Were the lawyers specifically selected because they had clearances, an acknowledgment there might be classified material unlawfully housed in the office?
After the fourth batch of documents was discovered this week (the third found in Delaware), Richard Sauber, referred to as the “special counsel to the president,” stressed that he has a clearance. Sauber admits the lawyers who found the first batch at the residence didn’t have clearances but says he found the later documents.
It remains unclear which lawyers were involved in which discoveries, whether they had clearances and (if so) at what level. In fact, it seems to suggest Biden continued to use uncleared lawyers after his team found highly classified documents Nov. 2 in the Penn Biden office closet in Washington.
That itself could be viewed as gross mishandling of classified information.
It’s strange Biden did not use security officers or the FBI to conduct further searches. The president has a host of people who regularly handle classified material. So why use the lawyers?
The answer appears the same as in the case of Hillary Clinton’s emails: control. Using private counsel allows Biden to raise attorney-client privilege. Trump also used counsel, but eventually the FBI raided his home to search and remove not just classified material but documents found in boxes with that material.
While that attorney-client privilege can be overcome under a “crime/fraud exception,” it adds a level of initial protection. It also allowed Biden to control the discovery and initial record of the discovery of classified information.
The key to any investigation will be the chain of custody extending back to the documents’ removal in 2017 when Biden left office. How these documents appeared in their discovered locations is known only to his lawyers. It’s a link in the chain of custody that Biden effectively controls.
With Mar-a-Lago, the FBI was criticized for staging documents to be shown in the storage room. The photos were then leaked to an eager media. There will be no staged photos of documents alongside Time magazine covers for Biden.
Nor were documents he housed with classified documents removed. Indeed, it’s not clear if the FBI will know what documents were stored in the same boxes.
What was potentially lost is significant. Classified documents are generally supposed to be in folders with a thick, colored border and large printed classification warnings. Were some of those folders observable before they were moved? If so, anyone could tell a pile contained classified material, including the president and passersby.
Likewise, the initial discovery could show the context of surrounding material. The FBI at Mar-a-Lago carefully photographed that context and its search. Here, we’re relying on counsel to have kept such a record when most lawyers would be reluctant to do so given the risk to their client.
The key is that unlike FBI agents, these lawyers are not acting on behalf of the public interest but for the president’s personal interests.
If there are criminal charges, the key witnesses will be lawyers representing the president as an individual. They are more likely to minimize incriminating or embarrassing elements.
And they are themselves under scrutiny. Since they may not have had sufficient clearances to do this work, it is in their interest to downplay any expectations or warnings of additional classified material scattered around Biden’s home or office.
Concern over the use of lawyers has only grown with time. Biden not only continued to have his lawyers search after the first discovery, but did so for months through subsequent discoveries.
After finding highly classified material in Biden’s garage Dec. 20, private counsel — not the FBI — found another document in an adjacent room Jan 11. Sauber found more classified documents the next day.
Those last two findings followed White House assurances that the “thorough” search was “completed.” It obviously wasn’t thorough enough.
They raised another question. It would seem unlikely a document with a proper classified cover could be missed. The folder has thick red or yellow borders running around the edges and large black classifications like “TOP SECRET” emblazoned across the top. If that was missed, the earlier searches were clearly negligent.
Alternatively, and more concerning, the internal documents might have been removed from the folders and stored without cover. That would indicate someone removed and reviewed them — an act showing knowledge of the classified status. If they were removed at Biden’s residence, he would be the chief suspect in such use.
It would utterly destroy the “inadvertence” defense.