Some of the world’s biggest economies are on the brink of recession

This headline article was written before the recent chaos on the New York Stock Exchange and yesterdays 2000+ point drop. There’s a temptation to either bail out completely or start buying more positions if you have cash ready to put to work. Personally, I have some cash but I’m going to wait a few weeks.

As I write this Tuesday morning, the DOW is up over 800 points. We may end the day in positive territory. But looking forward another couple of weeks or more, I’m guessing we’ve not seen the bottom, and may not for a month or two.

Meanwhile, small business owners are starting to feel the pinch. My son, who earns his living re-modeling kitchens and bathrooms, etc. for people, or may need new drywall because their house flooded, is reporting disruptions.

An elderly couple with whom he was scheduled to work next week, called to say they are self-quarantining themselves for two weeks. To me, that seems a little bizarre since where we live, there’s as yet no confirmed cases of the virus. My son says that’s probably because virtually no one has been tested yet. When that happens, we could easily see a spike in known cases. I’m trying to living a normal life, but with additional precautions like bumping elbows and not shaking hands, or carrying hand sanitizer wipes when we go out to eat.

Near our sons’ workshop is a tenant that sells and maintains water desalinization devices for cruise ships. They just had three contracts cancelled. I can only image how that and similar business disruptions are going to affect not just our economy but the global economy.

Will it lead to a recession? I have no idea, but there is certainly more downward pressure than there was two months ago. I’m not encouraged by the manifest level of incompetence shown by our elected leaders and their minions. You’ll have to draw your own conclusions about that going forward. Me, I’m going to stay at home as much as possible which isn’t too difficult since I’ve always been a shy, quiet, retiring person.

By Julia Horowitz, CNN Business \ February 23, 2020 \ https://tinyurl.com/uquwv8y

London(CNN Business)Markets closed out last week on an anxious note. It’s not difficult to see why: the coronavirus continues to spread, and there are signs that some of the world’s top economies could slide into recession as the outbreak compounds pre-existing weaknesses.

Take Japan: The world’s third-largest economy shrank 1.6% in the fourth quarter of 2019 as the country absorbed the effects of a sales tax hike and a powerful typhoon. It was biggest contraction compared to the previous quarter since 2014.

Then there’s Germany. The biggest economy in Europe ground to a halt right before the coronavirus outbreak set in, dragged down by the country’s struggling factories. The closely-watched ZEW Indicator of Economic Sentiment in Germany decreased sharply for February, reflecting fears that the virus could hit world trade.

Bank of America economist Ethan Harris points to the number of smaller economies that are hurting, too. Hong Kong is in recession and Singapore could soon suffer a similar fate. Fourth quarter GDP data from Indonesia hit a three-year low, while Malaysia had its worst reading in a decade, he noted to clients on Friday.

Meanwhile, engines of growth like China and India slowed in 2019. Fourth quarter GDP data for the latter comes out this week.

All of this brings to the fore concerns about the global economy’s ability to withstand a shock from the coronavirus. Harris says the weak quarter was likely a result of lingering damage from the trade war between China and the United States. The coronavirus is poised to make matters worse.

“Global equities have rebounded as the US and China have converged to a ceasefire, but companies with global supply chains remain deeply uncertain,” he said.

On the radar: Even the United States may not be in as strong a position as previously thought. IHS Markit said Friday that US services sector contracted in February, with the reading hitting a 76-month low. It’s the first time the sector has contracted in four years.

One thought on “Some of the world’s biggest economies are on the brink of recession

  1. So Yeon Ryu

    Many economies around the world have been spinning their wheels for years. Now, with the help of the media, we may be facing a recession here. Our economy, fortunately, is strong, and this very serious pandemic will be nipped in the bud (not entirely, but due to the hysteria, faster than it would have been had it run its course.) That’s the upside. The downside is the disgusting glee with which the major media and Democrats (but I repeat myself) are acting over “Trump’s Katrina”. I have NEVER seen such active rooting for a recession all just to beat Trump. Your son has the Democrats to thank for that. To say that our leaders are incompetent, your confirmation bias is showing. Government is bad at just about everything, but if dems were I charge, the media would be hushing this up, as they did in 09 when 61 million Americans had H1N1.

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