Recessions always start out as downturns

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Slowing growth in Europe and emerging markets and October’s equity sell off have got economists pondering when the next recession might strike.

Recessions are not rare. Donald Trump, born in 1946, has lived through 12 US recessions. Britain has had eight since the War.

Some countries do better, but they are outliers. The Netherlands had 26 years of interrupted growth 1982 and 2008, a record matched by Australia since 1991. The International Monetary Fund reckons that economies are in a state of recession roughly 10-12% of the time. For most rich world economies recessions are like London buses - there will always be another one along.

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Posted on 12/11/2018

Downs and ups in equity investing

Funds

It ended on a high note last week, but overall October was a rotten month for equities. The world equity market has just had its worst month since 2012, with the benchmark MSCI world index down 7% in October. This fall has more than reversed earlier gains, leaving the global index down 3% so far this year.

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Posted on 05/11/2018

Global Economy in Charts

Download the charts in pdf format here
Download the charts in powerpoint via SlideShare here

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Posted on 29/10/2018

Five features of Britain’s jobs market

Employment

The UK is running out of workers. At 4.0% the unemployment rate is at the lowest level since the early 1970s. This is below the rate in historically low-unemployment countries including Sweden, Denmark and Canada. A record 832,000 jobs are unfilled in the UK (two of them in the economics team). The attrition rate, the rate at which people change jobs, has shot up to its highest level since records began in 2001.

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Posted on 29/10/2018

Austerity may be dead, but what about government debt?

Pound

The financial crisis, recession and a slow recovery played havoc with the UK’s public finances, leaving the government with the largest ever peacetime budget deficit.

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Posted on 22/10/2018

Brexit worries dominate latest CFO Survey

Road

The third quarter Deloitte survey of UK Chief Financial Officers released today shows concerns about Brexit weighing heavily on business sentiment.

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Posted on 08/10/2018

The squeeze on Middle America

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Last week the team came across some remarkable data. The Oxford economist Max Roser estimates that in 1820 more than 90% of the world’s population lived in extreme, absolute poverty, defined as living on less than $2 per day in today’s money. By 1981 this had fallen to 44% of the world’s population. Today it stands at less than 10% of the world’s population.

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Posted on 24/09/2018

What happened over the summer?

What_happened_summer_2018

 

The summer months tend to be pretty thin for media coverage of economics and finance. Like the rest of us, journalists take their holidays in July and August. Yet economics is no respecter of holidays and events and data have continued to pile up.

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Posted on 03/09/2018

Turkish lessons

Turkey_crisis

Emerging market economies have been the main losers from US protectionism and higher US interest rates.

 

Capital has flooded out of emerging economies to the US to benefit from rising interest rates. This has meant less liquidity and has sent some emerging economy currencies through the floor. Emerging market governments or businesses which borrowed in dollars, and many have, are having to cope with rising financing costs and a heavier local currency debt burden.

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Posted on 28/08/2018

Tariffs and global growth, a brief update

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The imposition of tariffs on imports of steel and aluminium by the Trump administration in March has sparked a cycle of retaliatory tariffs. This is a serious outbreak of protectionism, one that is already acting as a drag on growth. Yet the global trading system is in rather better shape than it looks. This week’s Briefing explains why.

 

First, the bad news.

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Posted on 20/08/2018