Global Economy Hits Weakest Patch Since Financial Crisis

Global Economy Hits Weakest Patch Since Financial Crisis

The global economy’s softened throughout Y 2018 has left the pace of expansion the weakest since the global financial crisis a decade ago.

A new GDP tracker puts world growth at 2.1% on a Q-Q annualized basis, down from about 4% in the middle of last year. While there is a chance that the economy may halt the slowdown, the risk is that downward momentum may be self-sustaining.

The Big A: The reasons for hope?

The Big A: The Fed’s decision to pause its interest-rate hikes, a US-China trade truce and the fading of the shocks that battered EU in Y 2018 could mean stabilization is just ahead.

Other central banks have also stepped up, with the ECB last week announcing new measures to help the economy through the current weakness.

The global economy is not out of the woods.

The OECD’s latest composite leading indicator published Monday indicates easing momentum in the US, the UK, Canada, and the EU show signs of stabilization there and coming to China on a trade agreement with The Trump Administration.

Notably, the ECB policy makers have been keen to put a brave face on the EU’s deterioration, pushing the view the Eurozone is experiencing a slowdown, not a recession.

There has been a modest pickup in some economic numbers recently, though also high-profile disappointments. US retail sales rose in January after the biggest fall in almost a decade in December. A measure that some view as a cleaner gauge of consumer demand jumped 1.1%.

Last week, the US reported employers added the fewest jobs in more than 2 years. There may have been 1-off factors to blame, but the scale of the miss puts in focus the idea that the economy’s losing steam.

In Germany, industrial output unexpectedly fell in January, though a large upward revision to December nullified some of the gloom. A manufacturing index points to an extended slump, and production has posted Y-Y declines 3 months running. And Germany has not yet seen The Trump Administration’s auto tariff schedule yet.

America First!

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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