“Global growth is slowing and the world economy is headed for a recession in 2019 unless something happens to give it renewed momentum.
“The OECD’s composite leading indicator fell to just 99.3 points in November, its lowest since October 2012, and down from a peak of 100.5 at the end of 2017…
“The OECD composite leading indicator has been weakening consistently for the last year and now points unambiguously to a contraction ahead.
“Most of the world’s major economies outside the United States showed clear signs of slackening growth in the fourth quarter of 2018.
“Even in the United States, the Institute for Supply Management’s manufacturing index for December showed the sharpest deceleration in growth since the recessions of 2008 and 2001.
“Global trade volumes showed signs of slowing towards the end of 2018 after strong growth in 2017.
“Air freight through Hong Kong International Airport, the world’s busiest air cargo hub and a proxy for global trade, was down 1.6 percent year-on-year in the fourth quarter.
“Air freight volumes in Hong Kong were down by a massive 5 percent in December compared with the same month a year earlier, according to the Civil Aviation Department.
“Experience shows the economy is characterised by a significant number of positive feedback mechanisms which amplify booms and slumps.
“Expansions tend to accelerate as business investment, employment, incomes, consumer spending and equity prices reinforce each other.
“Once the economy starts to lose momentum, however, all these factors tend to interact with each other in the opposite direction to intensify the slowdown.
“A soft landing is still possible but a hard landing is more likely unless something happens to kickstart global growth.”
“The possibility of a global recession ranks as the top concern on the minds of corporate leaders as they head into 2019, according to a new survey of chief executives from the Conference Board, a business research group.
“That is a dramatic reversal from a year ago…”
“A combination of the China trade war and government shutdown could be enough to tip the U.S. economy into recession this year, according to Torsten Slok, Deutsche Bank’s chief international economist. The stark warning comes amid emerging signs that the world’s biggest economy is slowing down as gauges of manufacturing and consumer sentiment have fallen in recent weeks.”
“Home sales in the US slumped in December…
“Sales dropped by almost 11 percent, the biggest decline for any month since 2016, Redfin said. Previously hot metropolitan areas are cooling fast. Prices dropped 7.3 percent in San Jose, California.”
“Vancouver’s housing market is looking more fragile than Toronto a year after policy makers tightened mortgage lending to slow a boom… Sales in the west coast city plunged 32 per cent last year, driving benchmark prices down 6.5 per cent over the past six months, according to Canadian Real Estate Association data released Tuesday. Toronto also saw sales fall sharply, but by half as much as Vancouver.”
“A measure of Australian consumer confidence took a spill in January as respondents turned gloomy on the economy and their own finances at the start of the new year. Wednesday’s survey showed the Melbourne Institute and Westpac Bank index of consumer sentiment slid 4.7 per cent in January, from February… That was the sharpest monthly decline in over three years.”
“Japan’s core machinery orders slowed sharply in November in a sign corporate capital expenditure could lose momentum as a bruising U.S.-China trade war spills into the global economy.
“The slight 0.02 percent decline month-on-month in core machinery orders, considered a leading indicator of capital expenditure, was well below the median estimate for a 3.5 percent increase and marked a slowdown from a 7.6 percent expansion in October.”
“Singapore’s exports recorded their worst decline in more than two years in December as shipments of electronics and pharmaceuticals plunged, official data showed on Thursday. The unexpected decline comes despite ongoing trade talks between the United States and China to defuse trade tensions…
“Non-oil domestic exports in December fell 8.5 percent from a year earlier, data from the trade agency Enterprise Singapore showed…”
“The year-on-year growth of nominal GDP [for China] — or the economic expansion pace unadjusted for inflation — will slow by more than 2 percentage points this year, according to UBS Group AG, from the 2018 level hovering near 10 percent. That’s because the rapidly weakening factory inflation will weigh on the economy-wide price pressures.”
“The Chinese company that defaulted on a bond on Tuesday reported cash levels just four months ago that were enough to pay the debt 15 times over. Kangde Xin Composite Material Group Co., based in the eastern province of Jiangsu, failed to pay a 1 billion yuan ($148 million) local note due Jan. 15 due to a liquidity crunch, according to the company.
“Yet as of end-September, it had 15.4 billion yuan in cash and equivalents, more than double the amount of its short-term debt, according to regulatory filings.”
“Bank of England Governor Mark Carney on Wednesday likened the $2 trillion leveraged loan market to subprime mortgages that defaulted 10 years ago and triggered a global financial crisis, in a warning to British lawmakers. “We are concerned just because the pace of growth has been quite rapid for some time,” Carney told the lawmakers.”
“As a legion of heads of state and business leaders head to Davos for the annual World Economic Forum (WEF) next week, world affairs are as unpredictable and unstable as ever.
“In the 12 months since the last forum, global trade relations and diplomacy as well as domestic politics have been fractious, to say the least.”
“It’s been a decade since Congress approved a huge emergency package of spending projects, payments to individuals and tax cuts to stimulate a U.S. economy staggered by the 2008 recession…
“I was the U.S. budget director when President Barack Obama signed the stimulus legislation on Feb. 17, 2009 — I offer eight lessons based on recent history and amid fears that the next recession might not be far away:”