"With the stock market continuing to seesaw, much like a "perfect storm" at sea, the consequence of converging bad
weather fronts, significant global trends have begun to intensify, and
converge, on the global economy during these past weeks."
That convergence has already begun to "come ashore" and impact US equity markets, and could likely do so even more intensely in the weeks to come. Effects on the US real economy and policy in the short to medium term are also inevitable. The convergence is still in its early phase, but its initial US "landfall" is already evident.
The IMF, the European business press and other sources - private and official - are now all warning of the growing risks of deflation on the horizon. When deflation occurs, a host of nasty things economic follow: consumers slow their spending (already a problem in Europe), businesses reduce investment causing unemployment to stagnate or even further rise (another nagging Euro condition), and debt actually rises in real terms (and we know all about Euro debt).
Deflation is probably a better indicator of a weakening "real" economy longer term than is GDP, given the limits of that latter term in measuring real trends.
Read more: An Emerging Global 'Perfect Storm?' 4 Key Trends To Watch - Seeking Alpha
That convergence has already begun to "come ashore" and impact US equity markets, and could likely do so even more intensely in the weeks to come. Effects on the US real economy and policy in the short to medium term are also inevitable. The convergence is still in its early phase, but its initial US "landfall" is already evident.
The IMF, the European business press and other sources - private and official - are now all warning of the growing risks of deflation on the horizon. When deflation occurs, a host of nasty things economic follow: consumers slow their spending (already a problem in Europe), businesses reduce investment causing unemployment to stagnate or even further rise (another nagging Euro condition), and debt actually rises in real terms (and we know all about Euro debt).
Deflation is probably a better indicator of a weakening "real" economy longer term than is GDP, given the limits of that latter term in measuring real trends.
Read more: An Emerging Global 'Perfect Storm?' 4 Key Trends To Watch - Seeking Alpha
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