Tail Chasing Act

The global economy has been slowing for over a year if not longer. Overoptimistic economists, remain well behind the curve as usual, forever chasing their tail.

Once again the OECD Cuts Global Growth Forecast and Warns of Growing Risks.

The OECD cut its global growth forecasts, saying the economies of Brazil, Germany and the U.S. are slowing and warning that some emerging markets are at risk of exchange-rate volatility.

Global gross domestic product will expand 3.0 percent in 2016, the same pace as in 2015 and 0.3 percentage point less than predicted in November, the Organization for Economic Cooperation and Development said Thursday in a report.

OECD Growth Estimates

OECD Growth

Still Too Much Optimism

Those are significant cutbacks, yet still too optimistic. Europe and the US are way overstated.

If China achieves its target, it will do so at the expense of creating debt bubbles even bigger than they already are.

I expect a global recession defined as 2% global growth or less. The cutoff used to be 3%, but to eliminate using the word recession, the standard is now 2%.

For more on China’s economic miracle in reverse, please see China Rebalancing in Reverse: Nonperforming Loans Jump 51% from 2014 as Lending Hits Record High.

Mike “Mish” Shedlock