The not good, pretty bad economic news from Germany

There was nothing to cheer about in the latest readings of business confidence in Germany. The Purchasing Managers’ Index (PMI) from IHS/Markit moved into recessionary territory in September. Sentiment in the manufacturing sector declined to 41.4, which is the lowest level since mid-2009, at the depth of the financial crisis.   Same message came from…

All eyes on the American consumer

Last week brought a lot of talk of an American and even a global recession. A slew of weak economic data from China and the German industrial sector underpinned the negative narrative. The recession indicator from the Federal Reserve Bank of New York now shows a 31 percent chance of a recession in the US…

Trade Wars: please fasten your seat belts

What a week.   Even by the tumultuous standards of the Trump presidency, the last week has been quite busy. Federal Reserve did the warmups, but it was the escalation of the trade war with China, which really got the party started. We are now close to a global currency war, which could easily spin…

In Athens, a new beginning is under way

An ambitious government On 22 July, Prime Minister Kyriakos Mitsotakis’ New Democracy government won a vote of confidence after three days of debate in the Greek parliament. The vote was a formal endorsement of the government’s policy program after the decisive victory in the election on 7 July. With 40 percent of the votes –…

Central banks gone wild

It has been a remarkable week for central banks and the global economy. It was the week where the bureaucrats controlling the monetary system lost the plot. In Portugal, ECB President Mario Draghi almost promised to make negative interest rates even more negative. In Washington, Federal Reserve Chair Jerome Powell went further out on a…

The US and China escalate the trade war

It has been quite a week in trade. President Trump’s announcement on 3 May that he had lost patience with China caught most by surprise, particularly because the President and his administration has been signalling optimism for weeks and months. One week later there is no trade deal, and tariffs on Chinese goods worth USD200…

Global economic outlook is not all dark clouds

The global outlook has been marked down again, but data out of China have shown a pickup in activity, while Europe and some EM-countries are weakening. Policies in Washington – trade and monetary – remain pivotal to the outlook, but Brexit and a renewed budget-standoff between Italy and the EU also loom large. Oops!… I…

The Great German Slowdown

One of the most intriguing growth stories over the past year is the sudden stop in the German economy. At the end of 2017, GDP-growth hit 2.8 percent with contributions from both domestic demand and the ever-efficient export sector. Then a series of events occurred in 2018: a flu epidemic, strikes, and a dry period…

United States: Economic State Of The Union Is… Not Bad

Five weeks ago, I argued that the US economy was strong enough to warrant another couple of interest rate increases during the first half of 2019 followed by a pause. Economic data since (and the prolonged partial shutdown of the federal government) has justified a more cautious approach to short-term monetary policy.   The situation…