The Five-Year Funk: OECD Slashes Global Growth Estimates

Three mediocre years after the last recession ended, one of the world's leading economic policy advisers is warning that another may be on the way, as dawdling leaders in Europe and the U.S. fail to deliver the comprehensive solutions needed to restore growth.

"After five years of crisis, the global economy is weakening again," says OECD's top economist in its semi-annual assessment entitled Global Economy Facing Hesitant and Uneven Recovery. Since the Paris-based think tank's last report just six short months ago, the outlook for growth has worsened in all but three of its 34 member nations — including a forecast for two more years of mild recession in the euro zone, as well as a call for just 2% growth next year in the U.S.

"The most troubling aspect of this was their take on the U.S.," my co-host Jeff Macke says in the attached video. "They took our 2013 growth rate down to just 2% — and that's a best-case scenario that assumes we get a fiscal cliff deal done," he adds, calling the report more of an observation than an actual plan.
For its part, OECD is calling on global central banks to be prepared to take more action in the face of worsening conditions and the likelihood that elected officials, here and abroad, won't have the fortitude to properly address their fiscal imbalances and short-term threats. At the same time, the organization is also warning governments against becoming overzealous in their austerity efforts, saying that the simultaneous and cumulative effect of so many nations belt-tightening at the same time poses a serious threat of recession. On the other side of the equation, the group says even relatively prosperous places like Germany and China should consider implementing fresh stimulus plans of their own.

And so, just when you thought it was safe to get back in the water, as they say in the film "Jaws," we get a fresh reminder that the health, wealth and prosperity that all of us want from the New Year may actually just be more of the same. Expect another year of lukewarm growth and political hand wringing as we seek easy ways to get out of (or delay) our painful fiscal reality.

Comments

Post a Comment

Popular posts from this blog

I'm an accountant, I hate my job, but seriously, I wouldn’t know what else to do

I was born to be a lot of things, but being an accountant isn't one of them. In my heart of hearts I have always known this, but for some stupid subconscious reason, I have always ignored it. Why? Well...um...err...I didn’t know what else to do. How many people faced with the same predicament of deciding on a profession upon graduating used “not really knowing what to do” as their guiding compass? Blink. Ten years have passed and you’re left wondering, how did I get here? In this cubicle? Doing something I cannot stand (and I’m not even honestly good at), with people I quite frankly don’t really care about? For me that was accounting, a profession that conjures numerous clichés, such as boring, bean counting, personality not needed, number crunching etc etc. These have now evolved and have been replaced by repetition, reconciliations, long hours, fudging figures, high turnover, Enron and even more reconciliations. R-E-S-P-E-C-T But please don’t get me wrong, I have the utmost respe...
Read more

Three money managers who lived through the 1987 stock-market crash warn of danger today

Image
By  Philip van Doorn Published: Oct 31, 2017 1:49 p.m. ET SHARE   ‘I would take some money off now because ... there are clear signs of deranged valuations,’ says Gabelli fund manager Lawrence Haverty Getty Images A trader on the New York Stock Exchange on Oct. 19, 1987 — Black Monday. When the stock market crashed on Oct. 19, 1987, investors panicked. It was an unfamiliar event — the previous decline of a similar magnitude occurred 58 years earlier, in 1929. Now, 30 years after Black Monday in 1987, there are professional investors still at work who lived through that fateful day. In interviews, three of them talked about their experiences, offered insights into warning signs and gave advice on how to handle major downturns. They are: •  Lewis Altfest , president of Altfest Personal Wealth Management, which manages about $1.3 billion for private clients. Altfest founded the firm in 1983 after working as a general partner and director of research at Lord, A...
Read more

Have We Reached a Top?

By James Kostohryz It's never been my position that the flow of fundamental news would turn from positive to negative overnight and in a total fashion. The world simply doesn't work that way. When I terminated my core long position a couple of weeks ago for reasons explained in�Ten Reasons the Countertrend Rally May Be Over,�I outlined a series of factors I believe may manifest in the later half of 2009 and the first half of 2010. Indeed, most of these factors will be more back-end loaded, as negative factors tend to build on one another and gain momentum in time through the medium of psychology and social mood. It's my view that the flow of economically relevant events�-- and perceptions of these events --are in the early stages of a transition. In this case, a transition means the flow of relatively good news will tend to wane somewhat while there's an uptick in relatively bad news. This is what one would expect at a top. However, it's to be expected that during t...
Read more