Here are some Converting Curmudgeon bullet points of interest from his presentation:
- Industrial production in US manufacturing rose 1.5% over the last six months before declining in
- Growth in Chinese industrial production has accelerated since early 2016. Official data don’t fully
show acceleration because they didn’t show their slowdown.
- Industrial production in European Union manufacturing has been stronger than we’ve been led to believe. Weak currency offsets the current risks from Brexit.
- Industrial production in Japanese manufacturing is nearing the top of its 2011-2016 range.
- Manufacturing in Brazil fell to new cyclical lows but may have bottomed.
- Only a few countries are routinely setting record highs (i.e.: Poland, Mexico).
- There was no “manufacturing recession” in 2015-16, but price declines (and declines in mining and utilities) made it feel like one. That’s behind us now.
US Labor Force:
- US payroll employment continues to rise; now at 145 million.
- US unemployment rate is now 4.5% (considered by some to be “full employment”). The economy can continue to grow at full employment because hours/week can be increased; people who have left the labor force can return; and productivity growth can still accelerate.
- US manufacturing had been held back until September 2016 by a strong dollar and slow growth abroad; low oil prices have not helped US industrial production.
- Global GDP is expected to be up 2.8% this year and up 3.0% next year; North America should see GDP rise 2.5% in 2017 and 2.9% in 2018.
- Acceleration in US growth will show up in annual data this year. China halted transition to consumer-led growth to end slowdown. Europe continues to muddle through (despite Brexit). Growth in Japan is picking up, aided by the weak Yen. And much of South America is hamstrung by poor economic policies.
Slow growth for the long haul?
- Globally, the story is persistently slow growth. 1) High government debt slows long-term growth.
2) Demographics (aging population) also contribute to slower trend. 3) Tax and regulatory complexity holds back productivity. 4) Increased concentration (industries and companies consolidating) may be holding back growth.
- There’s the potential for GDP growth to be below 1% in Japan, near 1.5% in Europe, and around 2% in the US on a long-term basis.
- Corporate tax cuts, & business deregulation (see President Trump’s plans), and cheap oil are good for long-term economic growth.