ECRI forecasts downturn in US economic recovery

Excerpts from Your World at 10 on CNBC-TV18 Watch the full show »

With conflicting data from the US economy for the past few weeks, gross domestic product (GDP) growth for the second quarter has slowed to 2.4%.

According to the latest jobs report, the US economy lost 131,000 jobs in the month of July. The manufacturing sector maybe slowing but auto sales are up. Overall services sector is strong but retail sales are weak and the two consumer confidence indices are moving in opposite directions.

In an interview to CNBC-TV18, Lakshman Achuthan, MD of Economic Cycle Research Institute (ECRI), tried to make sense of all the conflicting data that is coming in and what it means for the US economy.

Below is a verbatim transcript of the interview. For the entire show watch the accompanying videos.

Q: What do you make of the jobs numbers that came in today and then we will talk about various data that we have been seeing over the course of the last few weeks?

A: The jobs report is a mixed bag and that is very disappointing. At this point of the recovery because everybody wants to see some jobs growth that is strong enough to reduce the pain of the jobs lost during the recession and we are not having that yet. We do have another month of the private sector adding jobs to the economy. That has been happening all year. Ultimately that has to happen in terms of the recovery being one that is sustainable.

What you are already seeing is that the pace of private sector hiring is not ramping up. It is not accelerating. That fits very much with our view that the economy itself would begin to slow around mid-year. So even though we have ended the recession and we have had a spurt of recovery, that pace of recovery is already trundling back and that is happening way before any significant healing in the jobs market has taken place.