Lakshman Achuthan: Business-Cycle Forecaster
"My greatest achievement has been the feeling of satisfaction over contributing in the longest ever growth span of the US economy, where millions of poor were given jobs, thus razing them above poverty levels."
In March 2001, Achuthan stunned everyone by announcing that the US, after ten years of the longest and most sustained growth in its history, had entered a recession. US officially confirmed the recession of its economy by the end of the year. And they called a recovery, weeks before federal officials began suggesting the recession was over. Again, Achuthan recalls, "In 1987, after the crash, when a lot of standard leading indexes were suggesting there might be a recession ahead, our long leading index was very clear: There was no recession in sight." And he was proved correct. "We're business-cycle forecasters. Our job is very much preserving and advancing and enhancing this business-cycle theory and approach," he says and adds, "It's a critical job--if we didn't do it, it might easily fall by the wayside. You know, just a few years ago, very prominent people were saying the business cycle was dead. And we had to stand up to that." "We're going through the longest stretch of concerted growth in decades," said Lakshman Achuthan.
ECRI's staff includes many researchers who worked with Moore during his long career. Their ongoing work encompasses two attributes that seem to conflict, but are actually complementary – continuity and innovation. "A high degree of continuity and institutional memory in its studies, combined with a high degree of innovation in the evolution of our research due to changes in the data, economic structure, and progress in the relevant sciences, help preserve and advance our long tradition of business cycle research,' said Achuthan.
And when asked as to what makes him and ECRI different from all the other economic forecasters, he says, "I think everybody else is very, very good, particularly between turning points, between the troughs and the peaks," he says with modesty. "Our forecast is a necessary complement to standard forecasting techniques. In other words, you should check if we see a turning point. If we don't see a turn and we agree with the standard forecasters, then they are very likely to be right--or at least the risk of them being wrong is very low. Then, when we do see a turning point, the risk of that standard forecasting technique being wrong has gone way up."
Lakshman, whose father Radh Achuthan is a Keralite, praised the growth model of India, which was of "low inflation and higher growth level," which is very unique in the world, he said. This factor attracted several US firms toward India, especially in the 1990s, when they were seeking to lower the cost and getting higher profits, Achuthan said. Although, India is on path to higher growth in the coming decades, Achuthan lamented that "too many people in India are left out of the boom."
Achuthan, while describing the factors that had led to the liberalization of the Indian economy since the early 1990s, said, "It all started with the Gulf War I, when many immigrants to the Middle East had to return to India, nearly emptying the cash-flow and the foreign reserves of India. It was from here, the seeds of economic liberalization were sown," the fruits of which the Indian economy is reaping in these years, he said. Beating the Business Cycle: How to Predict and Profit from Turning Points in the Economy, a book by Lakshman Achuthan and Anirvan Banerji, has received rave reviews. Written in an accessible style, the book reveals just how advanced the state of the art in cyclical forecasting has become. It also shows how decision makers at all levels – managers, small business owners, and individuals – can see into the economy's future when making key decisions.
Achuthan is the managing editor of ECRI's forecasting publications and regularly participates in a wide range of public economic discussions. He is a member of Time magazine's board of economists, the New York City Economic Advisory Panel, and serves as trustee on a number of nonprofit boards. Laxman Achuthan married Tracy White, "a story teller," in 2001 and the couple are expecting the arrival of their first child in the near future.
Achuthan comes from an illustrious family of intellectuals and community activists in India. When asked of any awards or honors he had received, Achuthan, who was honored in 2007 with the Kerala Center Annual Award, said, "My greatest achievement has been the feeling of satisfaction over contributing in the longest ever growth span of the US economy, where millions of poor were given jobs, thus raising them above poverty levels."
