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!
Related Articles
- Economists Expect 2nd-Quarter Recovery: Investigating the 1st-Quarter Weakness Theory
- First-Quarter Real GDP 0.7%; Spending Slowest Since 2009: Nowcast Model Needs Serious Work
Mike “Mish” Shedlock
The IMF is ALWAYS wrong with their ridiculous “hockey stick” forecasts.
Good for amusement purposes only.
Have the economists come up with an adjustment if, say, Hawaii .. or California knocked off the face of the earth by North Korea? …. wouldn’t want numbers to look bad due to pesky nuclear war.
So Mr. Shedlock, gonna write any articles on the slow-motion meltdown of the Canadian subprime lenders, and the Canadian RE market?
The much awaited crash is finally starting to happen.
Bank of Canada policy interest rate cuts to follow very soon, given that Canada is practically devoid of any other economic drivers other than residential real estate.
Global economic growth to remain between 2-3% over the next four years. US growth to remain between 1-2% over the next four years. Growth to start improving in 5 years time as autonomous vehicles result in huge productivity gains. US unemployment to remain very low, with skilled labor shortages being a drag on growth.
Hey Mark; Canadian growth came in at 2.5% today. What do you think it will be next quarter? Is this really the start of a real estate crash in Canada? Perhaps, but I have my doubts. I think that Canada will keep attracting foreign buyers as the US becomes a little less welcoming. Same for Australia.
My personal view is that the “foreign buyer” in Canada is non-existent (well a few Americans, but that’s about it!) and has been greatly exaggerated by a RE industry desperate to cash out at the top.
Autonomous vehicles, lol.
So why did Vancouver and Toronto implement extra taxes on foreign buyers?
The politicians wanted to “do something” about the problem and be seen taking action. But the problem is really that of local speculators. Which mostly aren’t even Chinese ethnicity.
lMark – the “foreign buyer” in Canada is non-existent? Are you out of your frigging mind? I suppose they were non-existent in Australia too? How about southern California, New York?
Get a grip on reality.
No, not out of my mind. There is next to no evidence of foreign buying to any statistically meaningful or unusual level in Canada. The Canadian bubble can be explained entirely in the context of mortgage credit emitted by the Canadian banking system, and in Toronto particularly and more recently, a drastically shifted sales mix.
My understanding is that when Vancouver brought in a foreign buyer tax, that sales dropped drastically, and prices dropped a little. Why do you think that happened?
The foreign buyers then moved on to Toronto and Victoria. Now Toronto has brought in a foreign buyer tax and Victoria is considering one.
Somehow, I think your assertion that there are no foreign buyers is counter to the evidence.
France is a failing police state with two poor candidates running for president. One wants to implement 1970s big union, anti-business policies; the other wants to implement big EU bureaucratic red tape.
England was going through lots of Brexit confusion… Theresa May’s snap elections for Parliament and the chaos in France will both help the UK in the short / medium term.
Nothing can help the IMF unless they officially get a clown car and one of those giant bright red clown wigs. Maybe a squirt gun / lapel flower gag.
So why are more tech companies setting up shop in France now than in the US?
Because the technically unemployed are counted as tech companies in France?
Otherwise, it’s because of lies, damned lies and statistics……..
Carpetbaggery? Financed by the CIA? End stage dementia?
A highly skilled workforce plus a willingness to bring in highly skilled talent from elsewhere. Plus the entire country is high speed digital. They are light years ahead of most of America. Your country is starting to fall behind.
America is falling behind, but Europe outside of Germany/Netherlands/Austria/Switzerland, and perhaps Denmark and Czech, is falling faster and farther….
Hiring French engineers for work in Silicon Valley is about as hard as getting the work permits done. They’ll be on the first plane for the asking. Somehow doubt the French “technology companies” you speak of, have as easy a time poaching talent the other way….
Biggest plus for France vs the above mentioned Euro countries, is that the French haven’t succeeded in going completely infertile yet. So there actually exists such unicorns as young people there. Not sure if that is solely due to high birth rates amongst immigrants who consider themselves less French than expats from Caliphatistan. But at least the high level statistics look less grim than for, say, non immigrant Germans.
I second fingerhole’s theory:
France is in “End stage dementia”
UK slowdown is baked in the cake for mid 2017 onwards. Inflation hitting real wages and there has been a lending binge for auto that is coming to an end.
Another good reason for a June election before it becomes too obvious.
BoE dropped rates after the June 2016 referendum in expectation of weakness. It was a mistake and added some extra fuel to the fire that didn’t help inflation. It helped suppress GBP for exporters but perked up inflation and borrowing.
Why did they do it? Because they believed their own forecasts and tried to get ahead of the action expecting an immediate slowdown. Others – more believable – predicted no impact until Brexit begins to bite and then a downturn. I think it could be a double dip after this slowdown a still bigger to hit around actual Brexit date.
no one cares what the central banks are doing.
Unless you are a big money center bank, you can’t borrow at those artificial rates anyway. And no one, not even the Japanese, still believe the “monetary stimulus” lie. Its a bailout for bad banks, pure and simple.
Don’t care what the BofE is doing or not doing. Tell me about what British private industry is doing, because that actually matters
It matters short term. You can get a 2 yr mortgage fix at <1%.
It encouraged excess exuberance in consumers, the come down is starting soon.
It’s bailout for bad banks, but also for bad everything else. In Japan, like in ost places, the construction and real estate “industries,” as well as the government sector, was/is the main beneficiary, aside from the banks.
But, since printing money produces nothing, what is used to bail out favored/connected sectors, has to ultimately be taken from productive ones. Japan’s massive, world beating, industry has been the piggybank that has been robbed over there. And while that was, and perhaps to a lesser extent still is, the largest concentration of productive wealth ever assembled in one “piggybank,” the amount of foregone innovation and wealth creation this policy of “take from the productive, hand to the connected” has resulted in, is also the greatest in all of history anywhere.
Europe is now barreling down the same road, attempting to use German and surroundings industry as their version of that piggbank. While America has largely already emptied theirs (the at one time technology leadership stemming from WW2 and the Cold War.)
Britain will do well.
All propaganda before the French election
UK is slowing. No 2 ways about it.
My take is Europe will accelerate into 2018 post elections then slow.
Draghi will pump, ignore any inflation, only take foot off gas when elections are past.
If Germans complain (as their inflation ticks higher), Schauble et al will throw the population a bone somehow (tax cut etc) with the aim of calming them down and increasing German demand to help Europe.
Macron will spend early too that will bolster Europe.
Europe might even get into an up cycle.
If it doesn’t come out of the funk they are in and Draghi winds back, expect a substantial slowdown at the same time German exports outside Europe also slow = recession = major EU tensions. 2019/2020? They will do whatever is necessary to avoid that.
Always worth a read
http://moneymovesmarkets.com/