“The world economy is disturbingly close to stall speed. The United Nations has cut its global growth forecast for this year to 2.8pc, the latest of the multinational bodies to retreat.
We are not yet in the danger zone but this pace is only slightly above the 2.5pc rate that used to be regarded as a recession for the international system as a whole.”
“Stephen King from HSBC warns that the global authorities have alarmingly few tools to combat the next crunch, given that interest rates are already zero across most of the developed world, debts levels are at or near record highs, and there is little scope for fiscal stimulus.
“The world economy is sailing across the ocean without any lifeboats to use in case of emergency,” he said.”
And here in the U.S.
“Each of the past four US recoveries has been weaker than the last one. The average growth rate has fallen from 4.5pc in the early 1980s to nearer 2pc this time. The US fiscal deficit has dropped to 2.8pc but is expected to climb again as pension and health care costs bite, even if the economy does well.
The US cannot easily launch a fresh New Deal. Public debt was just 38pc on GDP when Franklin Roosevelt took power in 1933, and there were few contingent liabilities hanging over future US finances.
“Fiscal stimulus – a novel idea at the time – may have been controversial, but the chances of it working to boost economic activity were quite high given the healthy starting position. Today, it is much more difficult to make the same argument,” he said.”
“JP Morgan estimates that the US economy contracted at an rate of 1.1pc in the first quarter, far worse than originally supposed.
The instant tracking indicator of the Atlanta Fed – GDPnow – shows little sign that America is shaking off its mystery virus. Growth was just 0.7pc (annualised) in mid-May.”
Just when you thought it couldn’t get worse. Read the whole article, it’s nothing but great news from one end of the globe to the other.
Better buckle up…..This is starting to get an air of inevitability about it.