Recently, the Jerome Levy Forecasting Center has caught the attention of various media outlets by predicting a 65% likelihood of a global recession in the upcoming year, which is expected to trigger a downturn in the US economy by the end of 2015. The chairman of the center remarked on October 23 that “the trend in recent global economic reports indicates a move towards a downturn in 2015,” as detailed in an article from Bloomberg. This forecast hinges on the notion that financial imbalances in developed nations could lead to another economic crisis—one that central banks may struggle to mitigate due to the already substantial monetary stimulus and the limited potential for introducing additional liquidity into the economy.
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● NFIB: US Small Businesses Expanding But Skeptical | CFO Magazine
● Eurozone September industrial production shows a disappointing bounce | FT
● UK unemployment holds steady at 6% as wage growth accelerates | Bloomberg
● German Council of Economic Experts cuts forecasts significantly | MNI
● Fed now firmly committed to data-driven interest rate hikes: Plosser | Reuters
● Xi’s rapid ascent in China poses challenges for the US | NY Times
The US economic landscape displayed signs of recovery in early November, bouncing back from a decline in the previous month. According to the Macro-Markets Risk Index (MMRI), the index closed at +8.2% on November 10. This resurgence follows a brief dip in mid-October, where it reached its lowest point in 2014. Even during last month’s low, the MMRI remained in positive territory. The ongoing series of readings above zero suggests that the risk of a business cycle downturn remains low, as a figure below 0% would indicate increased recession risk. In contrast, consistent readings above 0% suggest economic expansion is expected in the near term.
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● The Conference Board’s US Employment Trends Index saw an increase in October | CB
● NY Fed reports stable public inflation outlook at 3% for October | WSJ
● Eurozone Sentix’s Investor Confidence improves in November | RTT
● Concerns over a potential German recession arise as the moment of truth approaches | CNBC
● Japan’s consumer confidence declines for the third consecutive month, influenced by jobs and rising costs | MNI
● Brent crude oil drops below $82, reaching a four-year low | Reuters
● Russia prepares for a prolonged economic struggle with the West | Telegraph
James Grant’s latest book, The Forgotten Depression
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● Following the Jobs Report, the investment climate may be more favorable than anticipated | WSJ
● Concerns over revenue softness are troubling stock investors | WSJ
● Five reasons to continue favoring the energy sector | Financial Post
● US consumer credit rises in line with estimates for September | RTT
● Italy’s industrial output drops more than anticipated | Marketwatch
● US faces a crucial opportunity regarding the Iran nuclear deal | AP
● Bank of Russia revises 2015 economic forecast to indicate no growth | Bloomberg
● China’s October exports exceed expectations; outlook remains cautious | MNI
● The Forgotten Depression: 1921: The Crash That Cured Itself
By James Grant
Review via The Economist
The economic downturn that impacted the United States in 1920 and 1921 was severe, with real output decreasing by approximately 9% and unemployment potentially reaching as high as 19%—the data is inconsistent—making it notably worse than the so-called Great Recession of 2007-09. However, this slump is largely forgotten, overshadowed by the Great Depression that occurred a decade later. In his aptly titled book, James Grant, the founder of a well-known financial newsletter, seeks to revive interest in this intriguing period of economic history and to illustrate that a laissez-faire approach may resolve economic downturns more effectively than government intervention, as seen in the 1930s or even in 2008. He excels in recounting the historical narrative but is less convincing in his advocacy for a hands-off policy.
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According to the latest report from the US Labor Department, private payrolls increased by 209,000 in October. This rise, while slightly below expectations, still reflects a strong trend as the private sector continues adding jobs at or above the 200,000 mark for nine consecutive months—marking the longest stretch of such growth in two decades. Nevertheless, today’s figures have sparked discussion regarding the pace of economic acceleration. What remains clear is that the moderate expansion continues.
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This week’s positive reports regarding the US labor market, including jobless claims and ADP’s assessment of private-sector job growth, indicate that the forthcoming official payroll report from Washington is likely to present optimistic macroeconomic news as well. However, additional upbeat headlines are expected to exert downward pressure on bonds, which have already begun to weaken.
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● Eurozone rescue initiative: ECB to implement €1 trillion stimulus | Telegraph
● German industrial output increased by 1.4 percent in September | Reuters
● UK industrial output rose more than anticipated, driven by oil and automotive sectors | Bloomberg
● French industrial production remained unchanged in September | Marketwatch
● Economists foresee a sluggish start to China’s fourth quarter | ChinaRealTime
● Two reasons the Fed is likely to proceed slowly with rate hikes | Ciovacco Capital Mgt
This revision includes a clearer introduction and conclusion while enhancing the readability and cohesion of the text across various economic updates and forecasts.