Our favorite indicator here at Atlas comes from the Economic Cycle Research Institute (ECRI).  These folks have a phenomenal record of accurately tracking changes in the business cycle that can be traced back to the 1920’s.  In December of 2011 they said a recession here in the U.S. should develop by June of 2012.  This past May they stated, “We have not seen a slowdown where year-over-year payroll job growth has dropped this low without a recession.”  And more recently on Bloomberg (July 10), their spokesman said he believed the next U.S. recession had already begun.

The next logical question might be, “How come nobody seems to have noticed?  Not the Fed.  No major investment firms.  Not the official arbiters of such matters.  Nobody.”

Remember that a recession is a difficult condition to diagnose except in retrospect.  Officially the determination is made by the National Bureau of Economic Research which determined our last recession had begun a full year after its actual onset.  They sometimes pronounce a recession’s beginning at a date later than when they subsequently declare it had already ended, essentially missing the entire event as is occurred.  Obviously as a concept recessions are tricky.  Lakshman Achuthan, the ECRI spokesman, infers complacency sometimes prevents the gradual degradation of economic conditions to be seen as recessionary until a catalytic event suddenly bring things into a sharper focus.  In other words, an exogenous event needs to slap folks up alongside their head before they wake up to reality.

What might such an event be?  9-11 was one; the Lehman collapse, another.  Unfortunately, they can’t be known in advance.  This precludes perhaps any obvious candidate such as a collapse of the Euro.  But try this on for size.

Mexico is our nation’s third largest trading partner.  Our common border is considered “one of the busiest, most economically important borders in the world” according to our State Department.  They are our second largest foreign supplier of petroleum.  The result of their recent presidential election is currently being challenged.  While still a long shot, an unsatisfactory resolution to this problem has the potential to ignite a political firestorm accompanied by civil unrest with attendant sudden and damaging consequences to our cross-border trade which is approaching $1 billion dollars worth of legal goods daily.  If that happens, remember you heard it here first.  If it doesn’t, forget I said anything.  After all, the catalytic event is unknowable, just like the recession we’re in.