Economic forecaster Lakshman Achuthan warns the coronavirus pandemic is hitting the U.S. economy harder than the financial crisis.
“This is a brutal recession,” he told CNBC’s “Trading Nation” on Wednesday. “This recession is extraordinarily deep. Already, you’ve got 22 million people filing for jobless claims compared to 8.7 million jobs lost during the Great Recession.”
Achuthan, who’s co-founder of the Economic Cycle Research Institute, builds his case in a special diagram measuring recession severity. It includes his three D’s: Depth, diffusion and duration.
“The diffusion of weakness across the economy… spreads like wildfire,” he added. “This recession is certainly very severe. It’s affecting pretty much all industries.”
Achuthan turned negative within the last month. He initially hesitated to join the recession camp because the pattern in commodities prices suggested it was too premature to forecast one.
“I really need to see these difficult to speculate in commodity prices really start to plunge. They just haven’t done that,” he told “Trading Nation” on March 13 as the country began coronavirus shutdowns.
But within days, the data turned.
“Pretty much right after we did that interview, they collapsed,” said Achuthan. “They have now fallen to the lowest readings since late 2015, and they haven’t found bottom yet.”
If there’s one positive takeaway from Achuthan’s forecast, it’s the third D: Duration.
“This recession could end up being among the shortest on record,” he said. “Just a partial re-opening of the economy would lift activity off the extreme lows.”
But he warns the recovery will be arduous.
“It’ll be a long time. It won’t be anytime soon that we will be getting back to a more typical economic growth outlook,” Achuthan said. “We really need to see where the leading indexes go. That’s the critical point.”