The UK and France also reported GDP today. Both were lower than expected. Is a global slowdown underway?

UK GDP Weaker Than Expected

The Guardian reports UK GDP Growth Slower Than Expected as Inflation Bites.

The UK economy suffered a sharp slowdown in the opening months of this year, as the post-referendum rise in living costs took its toll on British households and hit consumer spending.

GDP growth fell more than expected to 0.3% in the first quarter from 0.7% in the previous quarter, the Office for National Statistics said.

France GDP Weaker Than Expected

MarketWatch reports France’s GDP Growth Slows Ahead of Election.

French gross domestic product expanded 0.3% quarter-on-quarter in the three months through March after growing 0.5% at the end of 2016, statistics agency Insee said. Economists polled by The Wall Street Journal had forecast a 0.4% increase.

Despite the high level of political uncertainty, total investment rose 0.9% quarter-on-quarter, driven by a 1.3% rise in business investment. Consumer spending still eked out 0.1% growth quarter-on-quarter despite a 3.8% tumble in spending on energy amid mild weather. But overall growth was held back by a 0.7% quarter-on-quarter decline in exports.

The slowdown in France casts some doubt over the strength of the eurozone economy in the first quarter. Business surveys have pointed to a pickup in growth during the first quarter, and have been cited by the European Central Bank as evidence that the recovery is becoming more “solid.” Official figures for gross domestic product in the currency area will be released Wednesday.

France vs US

As with the UK, France does not annualize GDP data. Growth of 0.3% would be reported as 1.2% in the US.

Thus, based on reported numbers, France is growing faster than the US.

More Soft Data Nonsense

Belief in confidence numbers and diffusion index surveys is widespread. Also note the business expansion just as exports slump. Is the weather too good globally?

Global Weakness Predictable

The global weakness was very predictable. We had a timely warning courtesy of the IMF on April 18: IMF raises global economic outlook in 2017 to 3.5% on investment recovery.

Global economic growth will accelerate in 2017 as investment, manufacturing and trade rebound, the International Monetary Fund said Tuesday as it raised its outlook for the year.World growth is expected to rise to 3.5% this year and 3.6% in 2018, compared to 3.1% last year.

“Stronger activity and expectations of more robust global demand, coupled with agreed restrictions on oil supply, have helped commodity prices recover from their troughs in early 2016,” according to a statement from the IMF, which is holding its annual spring meetings in Washington, D.C., this week.

The IMF also raised its outlook for the advanced economies, which include the U.S., the U.K., Germany, Italy, Spain, Japan and other developed nations. It now anticipates they will grow by 2% this year, up slightly from 1.9% forecast in January.

Thank You IMF!

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Mike “Mish” Shedlock