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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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Quick takeaways
- The U.S. economy is slowing due to a shift from the service sector to a recovering manufacturing sector, indicating evolving economic dynamics.
- Persistently high inflation presents challenges for the Fed's monetary policies despite current indicators showing no immediate recession threat.
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Current U.S. Economic Conditions
The U.S. economy is experiencing a slowdown, described as a growth rate cycle slowdown rather than an imminent recession. Leading indicators show that while various sectors are facing mixed signals, there is no immediate threat of recession since essential economic activities like output, income, employment, and sales have not significantly dropped. This slowdown stems from shifting dynamics within the economy, where the services sector, which previously drove growth, is easing, while the manufacturing sector is starting to gain momentum. This transformation reflects ongoing adjustments that have been in play for several months, despite media perception linking specific events to the overall economic condition.
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