Lakshman Achuthan: U.S. Economy Is Slowing

Mar 25, 2025

Lakshman Achuthan, co-founder of the Economic Cycle Research Institute, dives into the current state of the U.S. economy. He discusses the stubbornness of sticky inflation and the shift from services to manufacturing reshaping growth dynamics. Achuthan emphasizes that there’s no imminent recession but warns about potential market volatility due to the Fed's reactive policies. He also explores the global manufacturing resurgence, the influence of currency dynamics and tariffs, and how AI's impact on productivity could signify either a bubble or a boom.

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INSIGHT

US Economy Slowdown

The US economy is slowing down, like a supertanker making a turn.
This slowdown is a growth rate cycle slowdown, not a recession, where output, income, employment, and sales all fall.

INSIGHT

Shifting Economic Growth

The composition of US economic growth is shifting from services to manufacturing.
This shift is partly due to a global industrial upturn, which the US is participating in.

INSIGHT

Global Industrial Upturn

A global industrial upturn is positive for the global economy but its impact on commodity prices depends on supply-side factors.
China's participation in this upturn, though initially absent, is now strengthening the trend.

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Lakshman Achuthan, co-founder of the Economic Cycle Research Institute (ECRI), explains the reasons behind America’s slowing economy, clarifies why there’s no immediate recession threat, and highlights what the global industrial upturn means for investors in 2025 and beyond.

In this insightful conversation with Maggie Lake, you’ll learn:

Why inflation remains stubbornly high (“sticky inflation”) according to ECRI’s Future Inflation Gauge (FIG).
How the shift from services to manufacturing is reshaping the U.S. economy.
Whether the Fed’s reactive approach to inflation could lead to increased market volatility.
The critical difference between financial market corrections and a true economic recession.
Why currency dynamics and tariffs could become major economic factors this year. markets, and get a behind-the-scenes look at ECRI’s influential Future Inflation Gauge (FIG).

Chapters:

01:15 - Navigating Mixed Signals: Is a U.S. Recession Ahead?

4:43 - Shifting Gears: The Changing Composition of Economic Growth

8:43 - Global Turnaround: What the Manufacturing Upturn Means for the Economy

11:49 - China’s Pivot: Rethinking Inflation in a Global Economy

16:13 - Stagflation or Stability? Unpacking the Inflation Debate

29:45 - Navigating Uncertainty: Political Moves and Economic Models

36:03 - Feeling the Pulse: Is the U.S. Economy Truly Vulnerable?

41:47 - Bubble or Boom? Assessing the AI Investment Surge

43:08 - AI & Productivity: Measuring the Miracle?

44:54 - The Productivity Conundrum: Why Is Efficiency Lagging?

47:01 - Volatility vs. Fundamentals: Can Markets Disrupt the Real Economy?

49:26 - Momentum vs. Fundamentals: Navigating Investment Strategies

51:04 - Trade Tensions: Should Tariffs Alarm Investors?

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