Stock PEs in top 3% of most expensive PEs? Inflation, not recession?

[raylopez99]

This from the net: apparently Shiller, a housing bear, is also a
stock bear--he claims that "cyclically adjusted" stock PEs are in the
top 3% of the most expensive PEs (to see this, go to this groups
files, here: http://tinyurl.com/395jbs , and note that a PE=25 is in
the top 31st of 32 categories, or the top 3%).

Is Schiller right? Or is his "cyclically adjusted" calculation like
those bogus economic figures of "cyclically adjusted GNP" that I never
gave much credence too?

Also of interest is that this CNN article predicts recession in a
couple of years, not now, and counsels inflation is the bigger threat
than recession.

RL

http://money.cnn.com/2008/02/05/news/economy/recession_invest.fortune/index.htm?postversion=2008020603

While the economic outlook is highly uncertain, one key fact is not:
Stocks are still expensive. Wall Street analysts never tire of telling
investors that equities are cheap. They cite the current price/
earnings ratios, which indeed appear reasonable. The problem is that
corporate earnings are coming off not just a cyclical peak but a
historic pinnacle, which makes P/E ratios look artificially low. Until
late 2006, average earnings for the stocks in the S&P 500 had jumped
by at least 10% over the previous year for 18 consecutive quarters, a
feat never before achieved. (Profit margins rose to well above their
historical average as well.) Yale economist Robert Shiller has
developed a formula that smooths out earnings to remove the cyclical
spikes. It shows that stock prices now stand at a lofty 24.5 times
earnings - well below the towering 27.5 posted in March but still
leagues ahead of the long-term average of around 15.