“Soft landing for global economy remains a long shot…
“Global industrial output was no higher in December 2022 than it had been twelve months earlier in December 2021 as spending on merchandise buckled under pressure from high inflation and excess inventories.
“The manufacturing slowdown is consistent with the onset of previous recessions… The slowdown in global trade and freight has been more severe… Global trade volumes were down almost 3% in December 2022 compared with December 2021… This abrupt downturn in trade has only ever been associated with the onset of a recession…
“Interest rates are rising from an exceptionally low base in this cycle, but cumulative rises of this magnitude have normally preceded a full-blown recession since the 1960s…
“It seems …likely that (a) household and business spending will buckle under pressure from prices rising faster than wages; or (b) persistent inflation in the service sector will force policymakers to tighten monetary conditions – with manufacturing activity as collateral damage.”
https://www.reuters.com/markets/us/soft-landing-global-economy-remains-long-shot-2023-02-28/
“Signals from shipping containers have a lot to say about global economy…
“Shanghai has seen more containers entering the port than leaving for the last 45 weeks, indicating a prolonged slowdown. American container ports experienced the largest monthly inbound drop in volumes since the global financial crisis of 2008.”
“Hong Kong Exports Plunge by Most in 70 Years as Demand Plummets.
“Overseas shipments plummeted 36.7% from a year earlier… the lowest amount since February 2020 and far worse than an expectation of a 27.6% fall in a Bloomberg survey of economists. The drop was the largest since September 1953… Slowing global demand and an economic downturn in China have hobbled the city’s trade and economic prospects.”
“World’s biggest chemical maker [Saudi Basic Industries Corp] sees profit slump in late 2022.
“The world’s biggest chemicals maker said profit margins would remain tight with the Chinese market yet to recover and the global economic downturn weakening demand for plastics and building materials… The ending of Covid lockdowns in China hasn’t led to a rapid rebound in consumption in the world’s second-largest economy, according to Abdulrahman Al-Fageeh, Sabic’s acting chief executive officer.”
“Larry Summers Sees Signals of a Sharp Drop-Off in [US] Economic Activity…
“Coincident indicators “look very strong,” said Summers, a Harvard University professor and paid contributor to Bloomberg Television. But “there are a variety of leading indicators that are more troubling,” he said… The former Treasury chief also reiterated the lack of past examples in which the US managed to avoid a recession when the unemployment rate dropped below 4% and inflation went above 4%.”
“The U.S. economy is in a strange and unprecedented moment, according to Austan Goolsbee, the new president of the Chicago Federal Reserve Bank…
“Goolsbee said he had no doubt that the economy will face “bumps in the road.” He gave the speech at an event hosted by Ivy Tech Community College in Goshen, Ind. “Lots of things in the economy got turned on their heads, and we need to figure out where they will land and what that means for the future,” Goolsbee said.”
“The fastest growing metro in the US is looking to a shrinking reservoir to keep the boom going.
“Like lots of spots in the West, the combination of more people and less water makes for an uncertain future around St. George, Utah. While this winter’s generous snowpack could buy precious time, the entire Colorado River system remains in danger of crashing if water gets too low at Lakes Powell and Mead.”
https://edition.cnn.com/2023/02/28/us/st-george-utah-water-lake-powell-pipeline-climate/index.html
“Canada among countries most at risk of housing crash spiralling into a bigger crisis, say these economists.
“The steep decline of housing markets, not just in Canada, but in advanced economies around the world is starting to raise red flags among economists… Canada, along with Iceland, the Netherlands, Sweden and Denmark, is among the five most vulnerable.”
https://financialpost.com/executive/executive-summary/canada-housing-crash-bank-crisis-risk
“UK house prices would have to fall by more than a fifth to restore mortgage affordability to last year’s level, in a sign the property slump may be worse than predicted, experts have warned…
“Repayments have risen from an average of £985 to £1,254 in the past year, according to Hamptons estate agents, putting a massive strain on household incomes.”
“UK grocery price inflation hits record high as more stores impose rationing.
“Grocery prices rose 17.1% in the four weeks to February 19, compared with the same period a year ago, according to data published by Kantar Tuesday. That’s the highest rate of inflation since the data company started tracking it in 2008, and is equivalent to adding an extra £811 ($980) to a household’s average yearly grocery bill.”
https://edition.cnn.com/2023/02/28/business/uk-food-price-inflation-shortages
“Ireland rues mistakes of the past as it struggles to keep the lights on… Back-up power generators have started to arrive in Ireland to help it keep the lights on during the next few winters.
“The mobile turbines, described as “effectively jet engines”, are set to be installed in areas including Dublin and nearby County Meath… in Ireland, surging demand for electricity and the closure of ageing gas-fired power stations have left the country vulnerable next winter and beyond.”
https://www.msn.com/en-gb/money/other/irelands-energy-crisis-threatens-blackouts/ar-AA181Iv1
“Finland sinks into recession.
“Economic crisis that started with Ukraine war has been marked by gradual deterioration of economic situation, driven by high inflation and tightening monetary policy… According to Jukka Appelqvist, chief economist of the Central Chamber of Commerce, a year’s worth of economic growth in Finland has practically been wiped out…”
https://www.siasat.com/finland-sinks-into-recession-2537465/
“With recession looming, Germany is in a much bigger bind than Britain…
“As it is, German GDP has already slipped back down below its pre-pandemic level, and looks set to fall further. The same fate awaits Italy, according to forecasts by Moody’s Investors Service. Japan too looks to be in the danger zone.”
https://www.telegraph.co.uk/business/2023/03/01/recession-looming-germany-much-bigger-bind-britain/
“Rising inflation in France and Spain fuels fears of more ECB rate increases.
“Inflation rebounded in France and Spain in February, sending European governments’ borrowing costs up as doubts increased over how quickly the European Central Bank will stop raising interest rates.”
https://www.ft.com/content/dc05bfee-e9ad-4ac3-89b6-744da511cfab
“Europe Blunted Russia’s Energy Weapon This Winter. Can It Succeed Twice?
“Relatively mild temperatures reduced demand for energy supply. But the conditions that allowed Europeans to survive the energy front of the war will look different in the year ahead.”
https://www.barrons.com/articles/europe-russia-energy-oil-pipeline-winter-sanctions-d9c089ee
“Russian Diesel Stuck at Sea as Mild Temps Fend Off Energy Crisis…
“As many as 1.9 million barrels of Russian diesel-type fuel is currently in floating storage, the most since October 2020, according to data from Kpler Inc. compiled by Bloomberg. The build-up, three weeks after EU sanctions took effect, indicates some cargoes loaded from Russian ports without buyers.”
“Users on edge as plunging production sparks warnings of Victorian gas supply crunch [Australia]…
“Gas users in Victoria are bracing for a supply crunch that regulators warn could hit as soon as this winter as production from historic fields in the Bass Strait dramatically tapers off… The forecasts have sparked concerns from businesses, unions and charities…”
https://www.abc.net.au/news/2023-02-28/victoria-faces-gas-supply-crunch-from-winter-2023/102019024
“China’s Growing Local Debt Means Less Money to Support Economy.
“A majority of regional governments — at least 17 out 31 — are facing a serious funding squeeze, with outstanding borrowing exceeding 120% of income in 2022, according to Bloomberg calculations based on available official data. That’s the threshold set by the Ministry of Finance to indicate disproportionately high debt risks.”
“China’s youth unemployment: Young people shun new rat race…
“During COVID-19 lockdowns, however, many young people began to reject the prospect of corporate careers — eschewing the rat race for lower-paid, more fulfilling work. The phenomenon is known as tang ping or lying flat.”
https://www.dw.com/en/chinas-youth-unemployment-young-people-shun-new-rat-race/a-64827388
“As Electoral Protests Swirl, Mexico’s President Goes Viral For Tweeting ‘Proof’ of a Mystical Elf.
“This weekend, tens of thousands of protesters gathered in Mexico City to protest a new law from President Andrés Manuel López Obrador, which they say threatens democracy in their country. For at least one moment on Saturday, however, the president’s attention was fixed elsewhere: on a grainy snapshot of what he said “appears to be an [alux],” which according to Mayan tradition is a type of goblin or elf.”
https://time.com/6258622/mexican-president-elf-photo-protests/
“Dozens of forest fires scorch Cuba, threatening brittle economy.
“Vast forest fires have continued to blaze across the island nation of Cuba, bearing down toward the province of Santiago de Cuba, home to the country’s second largest city… The fires had previously threatened Cuba’s Mensura-Piloto National Park, a sensitive ecological region…”
“The Daily Maverick said it had evidence that at least four criminal cartels had been operating within Eskom [South Africa’s state power utility] for many years.
“The publication said the cartels were responsible for some of the malpractice and sabotage at Eskom facilities, while equipment was often bought without the actual machinery arriving… This comes after former Eskom CEO André de Ruyter made explosive allegations against a senior African National Congress (ANC) member…”
https://ewn.co.za/2023/02/28/at-least-4-cartels-operating-within-eskom-report
“South Africa is on the verge of “collapse” amid rolling blackouts and warnings a total power grid failure could lead to mass rioting on the scale of a “civil war”… [picture from riots of 2021]
“South Africa’s President Cyril Ramaphosa declared a national “state of disaster” on February 9 in response to the record electricity shortage, which has seen Eskom institute rolling blackouts – dubbed “load shedding” – lasting up to 12 hours in some cases.”
“A year into Ukraine war, food prices rise and aid drops in Niger…
“A year after Russia’s invasion of Ukraine, the effects are still being felt across the world as inflated prices eat into the budgets of consumers, government and aid agencies in Niger – one of the world’s poorest countries.”
“Nigeria’s Bola Tinubu defends win in disputed presidential poll…
“Tinubu now faces a long list of national problems, including Islamist insurgencies in the northeast, armed attacks, killings and kidnappings, conflict between livestock herders and farmers, cash, fuel and power shortages, and deeply entrenched corruption.”
“Nigeria gas fuels Morocco, Algeria pipeline power struggle.
“Adversaries Morocco and Algeria are each racing to build a conduit pumping Nigerian gas to European markets, even as the continent aims to wean itself off fossil fuels. Both countries have moved to revive long-stalled projects in light of a gas supply crunch following Russia’s invasion of Ukraine a year ago.”
“Turks protest over government’s quake response in stadiums, on streets.
“Cries of “government resign” rang out from Turkish football stadiums at the weekend as fans criticised the government’s response to this month’s earthquakes that have killed more than 50,000 people in southern Turkey and northern Syria.”
“Israel political crisis sparks fears for economy.
“The governor of the Bank of Israel, Amir Yaron, reportedly called an emergency meeting of the financial stability committee.. Mass protests have demanded that the government withdraw a plan to circumscribe the powers of the courts. Israeli-Palestinian violence has also intensified.”
“Israel says motorist killed in West Bank held US citizenship.
“Israeli authorities said Tuesday that a motorist shot to death by a suspected Palestinian gunman in the occupied West Bank held both American and Israeli citizenship. It was the latest in a bloody string of violent attacks roiling the region.”
https://apnews.com/article/israel-government-west-bank-5546f544afb465b6a82f88492ec2d75c
“In Lebanon, police join ‘robbers’, storm bank to get their own money.
“Lebanon’s currency fell to a new low on Tuesday as police officers joined the ranks of many frustrated citizens, and stormed a bank in Tyre in an effort to obtain their own money. A group of police officers stormed the Societe Generale de Banque au Liban branch in the southern town of Tyre…”
“Toxic smog; an ‘air pollution catastrophe’ in Iran.
“In Iran this winter, hospital emergency rooms have been full, schools regularly closed, and many people unable to work or even leave their homes due to toxic smog… Dirty air is a chronic problem in Iran… due to emissions from millions of older vehicles on the roads, and from refineries, power plants, and factories.”
https://middle-east-online.com/en/toxic-smog-air-pollution-catastrophe-iran
“Pakistan economic crisis results in big layoffs; 1 million textile workers to be hit.
“National Trade Union Federation Pakistan (NTUF) Secretary General Nasir Mansoor was quoted as saying, “At least 1 million informal workers– mostly from the textile sector– are likely to lose their jobs.” Informal workers in Pakistan will be left without access to any social welfare scheme or severance packages given their employment status, he further stated.”
“Sri Lanka outlaws strikes as anti-tax protests spread.
“Sri Lanka’s government said Tuesday it was banning strikes in several key sectors, a day ahead of a planned one-day national stoppage called by unions to protest against painfully high taxes and utility bills. Anger toward President Ranil Wickremesinghe is growing…”
https://www.dailysabah.com/business/economy/sri-lanka-outlaws-strikes-as-anti-tax-protests-spread
You can read the previous “Economic” thread here. I’ll be back tomorrow with a “Climate” thread.
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Looks as if both Haiti and Cuba are failed States and that means more trouble ahead for the US in dealing with refugees, in addition to it’s Mexican border that also is in a crisis of so called illegals from Central America…
It is telling also your post on forest fires in Cuba…the link of overshoot, Climate change and peak everything can no longer be ignored.
How will humankind respond?
If like in the past, with the lizard brain …act first and then rationalize it’s actions.
Seems more conflict and division and selfish interest will rule
Very nice here today in Florida continuing the string of unprecedented stellar hot days.
The forecast though is changing….
Endless high pressure with no rain and very little wind here, Vince – quite unusual for the Hebrides. I’ll take it though. The bay is gorgeous and blue when the island dries out and there’s no rain to run peaty sediment off into it.
Surely the coverage of Pakistan is extremely sad.
The collapsing textile industry is putting the lives of 1 million workers!!! at risk. These are unimaginable numbers of people who are already working in extremely miserable conditions. I have been a regular ‘ witness’ to it and have always marvelled at the ease with which we continue our ‘pret a porter’ fashion whims every season.
It is especially sour in this case because just before Christmas 2022, after 10 years of negotiations, the Pakistan Accord was finally reached. Which is supposed to guarantee safe working conditions and fair wages for garment workers.
Some 187 fashion brands signed this binding agreement, which thus aims to improve the policies of more than 500 Pakistani textile factories, more inspections inside the factories to prevent all kinds of dangerous situations, and more hotlines so that workers can confidentially raise issues.
The Pakistan Accord builds on the Bangladesh Accord, and aims to better protect workers in the textile industry in Pakistan. Some four million workers are currently employed in the garment industry, more than half of whom are women workers. These workers work under deplorable conditions. They are paid unlivable wages and work in unhealthy and very unsafe factories.
Well I guess not much will come of it…all nice plans in an increasingly difficult retail sector in Europe…. with in France today yet another Gap bankruptcy in a long line of fashion companies.
https://www.lefigaro.fr/societes/gap-france-place-en-redressement-judiciaire-20230301
Zip, thank you. I had not heard about the Pakistan Accord. How unbelievably stressful to be cast out of your informal job in a cratering economy with basically no social safety net; and even more so if you have dependents. People at the margins are going to start starving.
An interesting Australian short news clip.
I agree that the RBA (just like CBs globally) kept interest rates too low, for way too long and now the proverbial chickens have come home to roost.
https://youtu.be/7bC5jMNYDVc
It’s hard to know what the right answer is. I know that Tim Morgan feels as you do and often criticises the “monetary adventurism” of central banks in the aftermath of the GFC…
I agree with Nomi Prins et al that the “money hose” could and should have been sprayed more evenly across all levels of society but the central banks were in a hell of a bind in 2008. They didn’t have much choice but to pull rates down and growth, certainly in UK, EU and Japan, has been too stagnant to encourage them to put them up much since. Oz may have been in a slightly stronger position; you’ll know more about that than me.
My broad brush-stroke overview is that the global financial system has for many years been having to “stretch” to compensate for encroaching limits to growth. Unfortunately, it has now reached its elastic limit and become another constraint on growth.
Indeed, they are running out of financial tools, as the linkages between the financial system and the material economy are decoupling or fracturing apart. Manipulating money supply doesn’t have the same effect as it did in times past.
Australia is in a somewhat stronger position with the material economy while we can continue exporting “essential” goods, like food and commodities without severe energy supply shocks.
Financially, we didn’t have a major collapse or need for banking bailouts in the 2008 GFC, and our interest rates stayed flat with a whole-of-population one-off cash-splash direct to bank accounts. I was making good salary, and received maybe $100… but my son on disability pension received around $1,500. I was quite shocked by that at the time 😍
This time around, our financial system has decoupled much further from the material economy, with far more serious debt-financing of capital into way overpriced assets.
Our last major recession was around 91-92, with the classic textbook rise in unemployment along with hiked interest rates. I had just bought my house then, at the peak of a housing price bubble, when our government said the hike in interest rates would bring on “the recession we had to have” to “take the heat out of the economy”..and tackle inflation etc… They didn’t get re-elected, but it worked. Unemployment rose, housing prices and business prices fell, and it recovered within a year or two.
I remember the pain of possibly losing my house, selling at a loss and maybe never able to get back in the market. But I thought then “swings and roundabouts”, bad luck, bad timing .. such things always hit those in the first and hardest 5 years of their major debts…if you can just hang on for the duration, it will get better.
But I’m not so sure this time, as they said on the short vid above….things are different now, it’s not the 1970s, or 90s. The hike in interest rates is not helping inflation much, not is it affecting unemployment rates.
Rain, thank you for those insights about Australia. It’s pretty amazing you’ve managed to go more than three decades without a recession.