Rolling Over

Here they come. After spending more than a year talking about nothing but good things ahead for the global economy, Economists are beginning to sound worried. In 2017, there wasn’t anything that could stand in the way of synchronized growth. In 2018, there’s no longer any synchronized growth, so now we can talk about what was standing in the way.

The latest is the IMF’s Managing Director Christine Lagarde. From earlier today:

Six months ago, I pointed to clouds of risk on the horizon. Today, some of those risks have begun to materialize.

That’s all well and good, but where were you last year? Lagarde last October:

Well, we would see that the long-awaited global recovery is taking root…Measured by GDP, nearly 75 percent of the world is experiencing an upswing; the broadest-based acceleration since the start of the decade. This means more jobs and improving standards of living in many places all over the world.

From recovery taking root to recovery being uprooted in about a year. Well done.

What happened was Trump, she says, but also, according to Bloomberg’s paraphrasing, “A strengthening U.S. dollar and tightening financial conditions have increased challenges for many emerging markets.” That’s the thing about starting from such a low-grade rebound as was actually the case last year; even if the trade war stuff was really the cause, had the global (in particular Chinese) economy been living up to the words the trade wars would’ve been small issue in 2018.

Instead, they are being made into the issue when the deficiency and therefore real economy drag is the same as we’ve seen (three times) before. Not that Christine Lagarde would know.

Ahead of their Golden Week National Holiday, China’s National Bureau of Statistics reported that manufacturing sentiment is down again. It’s not a slowdown that is materializing across Asia, it’s a rolling over.