The US and global economies are marking time while imbalances continue to build slowly. But, there were two surprising, and not necessarily related, events in June – the US May employment report was dismal; the Federal Open Market Committee (FOMC) slashed interest-rate projections. In this month’s letter Bill Longbrake explains why neither of these developments is all that surprising. Slower employment growth and low interest rates are here to stay. He believes that the FOMC’s interest rate projections are still too high.
In this month’s letter Bill Longbrake explains why he is putting his “Recession Watch” on the shelf for the time being. He summarizes why recent policy intervention has been successful in papering over significant global imbalances. But, he goes on to explain why policy has been palliative, not curative. Longbrake also examines the rise of populist movements across the globe, including the United States, and their genesis in the 2008 global financial crisis and subsequent policy responses. The remainder of this month’s letter provides updates on GDP, employment, inflation, productivity, financial conditions, and monetary policy in the U.S.
In this month’s letter, Bill Longbrake shares his worries about global economic and political trends along with summaries of similar concerns expressed in the International Monetary Fund’s World Economic Outlook and by the editor-in-chief, Zanny Beddoes, of The Economist. He also explores reasons for the surprising strength of Donald Trump and Bernie Sanders in this year’s presidential campaign. In addition to regular updates about the U.S. economic outlook, he provides a review of a recently published book, The Smartest Places on Earth, by Antoine van Agtmael and Fred Bakker, which describes how brain-belts that are emerging in the U.S. and Europe will reverse the global competitive advantage held in recent years by emerging economies. Read the full letter here.
In this month’s letter, Bill Longbrake explores the possibility of recession commencing some time during the next few months and initiates a “Recession Watch.” In recent weeks several developments emerged more or less at about the same time which spooked global financial markets. Are these developments the forerunner of worse to come, including a U.S. recession? Or, is the market overreacting to “temporary” shocks? Will policymakers be able to defuse anxiety? From the vantage point of the present it’s difficult to discern where the U.S. and global economies are headed and just how fragile global financial markets really are. Regardless of whether recession is imminent, substantial global economic and financial imbalances exist. Bill examines these imbalances and comments on how they might evolve and impact the global economy and financial markets. Read the full letter.
This month’s letter features two separate parts: a review of the key 2015 topics along with the regular Longbrake Letter.
Bill Longbrake extracts discussions of major topics that were included in various 2015 letters. These discussions explained and examined deep-seated trends which continue to evolve and shape global economies, markets, social systems and political governance. He provides additional commentary and updates on each topic, which are identified in bold italicized print. Developments in the United States receive the most attention, but because we are increasingly interconnected globally what occurs elsewhere has impacts on what happens in the United States.
Markets began 2016 with a massive anxiety attack about the threat of a collapse in global growth. In this month’s letter Bill Longbrake explores whether recent developments are a forerunner of worse to come, including a U.S. recession? Or, is the market overreacting to “temporary” shocks? Part of the difficulty in assessing prospects has to do with the unprecedented and aggressive monetary policy intervention of central banks in all major developed economies to force down interest rates in an attempt to stimulate demand and increase inflation. Academic theories are supportive of these policies. But, the theories may turn out to be deeply flawed or flat out misguided. It’s a huge bet! The consequences could be quite dire, if the bet turns sour.