By Brad Lamensdorf and John Del Vecchio
Growth rates in China are slowing, which could have implications for the world economy. Like government statistics in the U.S., one must take the officially reported figures with a grain of salt. The fact that they’re in the doldrums suggests that the true, sustainable, economic picture is much worse than what we see on the surface. GDP growth has plummeted from several years ago and flattened out since 2015.
To be sure, 6.7% growth is impressive but far less than the heady days of 8-10% plus. Just like GDP, industrial production has imploded and flat-lined.
Retail sales are trending down and came in below consensus.
Finally, the pace of fixed asset investment has slowed rapidly. The steepness of the decline resembles a double black diamond ski slope.
There’s an old saying that if the U.S. economy sneezes the rest of the world might catch a cold. But, the world is a smaller place today. It’s flatter. Other economies matter more than at any other time in modern history. Emerging markets have been under pressure. Emerging market currencies have become unglued. Now one of the major economies in the world is slowing sharply at a time when expectations of U.S. GDP growth of 4% are completely unrealistic (non-made up numbers).
The clues to impending turbulence keep adding up…