
Global economy is probably in recession - lopespm
https://www.reuters.com/article/uk-global-economy-kemp/column-global-economy-is-probably-in-recession-idUKKCN1UX1OF
======
40acres
At what point (if even possible) does the manufacturing and physical goods
based indicators lose their signaling status due to a more service based
economy? This question mainly revolves around advanced economies like the U.S,
last quarter business investment was negative but consumer spending was
robust. Services and healthcare are huge parts of the economy, are our
indicators still as valuable?

Granted, the global economy certainly seems like its close to recession
territory, with no help from international tensions — just wondering if our
measurements are losing their viability. Even Jay Powell cast doubt on the
Phillips curve recently.

~~~
MrEldritch
As long as humans continue to exist in the physical world, take up physical
space, and consume physical goods for food, shelter, and comfort, then
manufacturing will be a critically relevant part of the economy.

~~~
nostrademons
As long as humans continue to eat, agriculture will be a critically relevant
part of the economy.

We don't normally look at agricultural indicators like crop yields, arable
crop land, rainfall, food prices, and commodity futures because agriculture's
a _small_ but critical part of the economy. In modern developed economies,
under 5% of the population is employed in farming. So while soybean tariffs
may be tragic for soybean farmers, they have little effect on the broader
market, just as Bitcoin price crashes may have tragic effects on Bitcoin
miners but the broader economy doesn't care. The assumption is that we have
_enough_ food, and as long as we continue having _enough_ , metrics about _how
much_ food we produce aren't that important for measuring the overall health
of economy. This despite those metrics being a critical factor in human
population growth for millenia.

Manufacturing is rapidly attaining the same status. We will continue to need
_stuff_ for the foreseeable future. However, as long as we have _enough_
stuff, how manufacturers do is not terribly important to the broader economy,
because they're a rapidly shrinking source of total spending. In many cases,
when they're struggling it's because there's _too much_ stuff and they can't
find buyers for their products.

~~~
ben_w
This leads to two questions:

(1) if it’s a small but critical part of the economy, could it make sense for
it to switch to a centralised model?

(2) what happens when we have “enough” services?

~~~
wetpaws
1) Soviets did this with a mixed success.

2) we'll do something else

~~~
ben_w
1) Soviet example is not useful, because manufacturing wasn’t “minor” back
then.

2) what “something” is neither primary production, nor manufacturing, nor
services, yet capable of being scarce in a way that could be meaningfully
traded for the aforementioned?

------
gruez
>(Chartbook: tmsnrt.rs/2Yyra8r)

Is there a reason why the dip in 2016 isn't considered a recession, but this
dip is?

~~~
chris5745
The first figure shows the percent change from the previous year, so it’s
basically a moving slope of the actual trade volume. If it’s positive, trade
is increasing. Compared to the slope in 2009, I wouldn’t call the current
decrease a recession (but I’m not an economist). It may be negative but it’s
still pretty close to zero.

The author’s thesis is that mistaken protectionist policies that affect trade
are not in the interest of business and the economy. I don’t know that we can
conclude that, as changes in policy tend to create new opportunities for
businesses, both entrenched and new. The same cannot be said for policy that
is continuous and non-changing.

~~~
me_again
But changing policy at rapidly and at whim makes it difficult for businesses
to invest in anything that has a longer payoff. I think on balance business
people would prefer to have a fairly stable macroeconomic and regulatory
environment. Look at the UK, where uncertainty over Brexit has caused a
substantial drop in business investment.

~~~
Fjolsvith
Investors are different than business owners, and have different goals.
Business owners tend to find opportunity in change, whereas investors prefer a
steady status quo.

------
patientplatypus
I'm really worried this is the one that we don't get out of.

We've basically built our entire global economy on the idea that externalities
don't matter. Recently, I came across this
([https://www.sciencedaily.com/releases/2019/08/190808115117.h...](https://www.sciencedaily.com/releases/2019/08/190808115117.htm))
- between 1970 and 2012 there has been an _88%_ decline in large vertebrates
(ie fish). We already know that plastic is poisonous, our entire economy is
run on fossil fuels, etc. We've got less than ten years to completely change
how the entire planet operates socially or we'll just cook to death. How
likely is that?

It's gotten to the point where I'm walking down the street and the cognitive
dissonance is just unshakeable. What are people working so hard for,
accumulating so much "wealth" for, when the idea that anyone is ever going to
retire is laughable? How are people doing anything that involves a time
horizon of more than 5 years?

The recent shooters are evil sad people, but I _understand_. The world is
terrifying and it's driving everyone crazy. I just don't know how people are
coping.

~~~
WhompingWindows
Your comment feels very doom and gloom for me living in the Northeast USA.
Where specifically do you live? If you look at the forecasted outcomes of
climate change, the most likely losers are NOT in USA/Europe, which is where
most of HN readers are based. India, the Middle East, parts of Africa, parts
of Mexico, low-lying island nations - these are the really scary places to be
based out of in the next 100+ years. I don't think rich folks in the developed
nations have the most cause for alarm, sad to say.

Still, there's reason for hope. Many people care very strongly about saving
the planet/biosphere, new businesses and research are cropping up all the time
in this space. By the time 2050 rolls around, we very well may have technical
solutions to some of our pressing environmental issues that seem to be killers
now. Just consider 2019 -> 2050, that's 31 years. Back in 1988, wind and solar
were a dream, EVs were nonexistent outside the golf course, and very very few
people were passionate about fighting climate change.

~~~
patientplatypus
Except of course, with rising sea levels due to glacier melt many of the major
US cities will be underwater. You mentioned the Northeast? Here's an article
about how New York is going to be underwater
([https://gothamist.com/2019/05/21/new_climate_report_suggests...](https://gothamist.com/2019/05/21/new_climate_report_suggests_we_migh.php)).

Also, climate change doesn't have to hit your area specifically to be harmful.
Crop failures will lead to wars and displaced people. Water shortages in India
lead to angry people that want to fight over Kashmir, increased migration from
climate affected areas to richer areas cause ethnic tension (from North Africa
to Europe, from South America to the US). As an aside, clearly the policies of
nationalists are abhorrent, but they don't occur in a vacuum, and, in the US
at least, the left hasn't provided a clear path to a solution to this issue.

Here's the CIA being worried about such things
([https://insideclimatenews.org/news/30012019/worldwide-
threat...](https://insideclimatenews.org/news/30012019/worldwide-threat-
assessment-climate-change-intelligence-agencies-national-security)).

Yes, this is very doom and gloom. The facts are gloomy and connecting the dots
on our possible futures spells out, in all likelihood, doom. How can you not
see this?

~~~
selectstatement
Humans are a very adaptable species and there are no guarantees that the
environment should continue as it once was perpetually. The situations in
theses articles are just as likely to not happen as they are to come true.

~~~
patientplatypus
_The situations in theses articles are just as likely to not happen as they
are to come true._

Um, what? On what are you basing this likelihood on? These are scientists that
study this for a living. This sounds like complete fabrication.

~~~
selectstatement
That doesn't mean that they can predict the future with high accuracy. They
might have some chance slightly above random but there are way too many
variables unconsidered.

All it takes is one asteroid to invalidate all the predictions. Or one war. Or
one biological contagion. Or one technological innovation.

~~~
Fjolsvith
Then we should just lay down and die from the fear.

------
YinglingLight
>Policymakers are reluctant to announce a recession for fear of harming
consumer and business confidence and worsening the downturn (“Business cycles:
theory, history, indicators and forecasting”, Zarnowitz, 1992).

Not these days.

------
chrismaeda
Breathless headlines like this are usually a sign that everything is fine. If
the journos start saying you should mortgage your house and buy {tulips,
dotcom stocks, bitcoin}, then that would be a sign that the market is peaking.

~~~
seamyb88
If your definition of fine involves the current level of poverty worldwide and
the increasing trends towards billionaires exasperating at all-time-low tax
rates, then everything is peachy.

The real fallacy in this headline is the idea that any measure of how well the
world is doing, financially, could have at any time recently been adequate.

~~~
umeshunni
> involves the current level of poverty worldwide

Yup - poverty has been dropping worldwide over the last 30 years and billions
have been lifted out of poverty. These are the good times.

~~~
zbyte64
Good for some anyways: [https://www.vox.com/science-and-
health/2018/1/9/16860994/lif...](https://www.vox.com/science-and-
health/2018/1/9/16860994/life-expectancy-us-income-inequality)

------
pcunite
So, a possible _hint_ of a downturn, and we're calling it? Can we wait and see
what Christmas does?

~~~
fragsworth
The title says "probably", and you are misrepresenting it as two extremes (a
"hint", and "calling it") and expressing this misrepresentation like you're
appalled.

What is your motivation for this?

~~~
pcunite
My motivation is calling out what the possible motivation for the article is,
which is my duty and right, as a member of the HN community. I can weigh-in
just like the author of the piece did.

Statements like:

 _By most measures, the global economy is in the midst of the deepest slowdown
since 2015, and in many cases since 2009._

The author goes on to explain that:

 _the problem has stemmed from trade policy, which has turned sharply
protectionist and attempted to remake global supply chains._

Yes, things are changing, and like pouring antiseptic ointment on a burn, it
can sting a little. The turning of a big ship takes time, longer than it took
to create this article and make it seem we are off-course.

------
whatshisface
Never has there been a better time to invest: the markets have already priced
in 100% of the expected value of all of these worrying indicators, so you'll
be getting a good price. In fact, no matter what happens you get a good price.
On average, today is always a great day to invest.

~~~
orthecreedence
^ This is the exact kind of message that makes me want to pull out of the
market. Although, I already did a few weeks back when the S&P did a head and
shoulders (which turned out to be a false positive, apparently). Still not
rushing to put any more money in the market, though.

~~~
whatshisface
The message that the stock market trends upwards except for random movements
that retail investors can't predict was as true last year as it is today.

~~~
msmerberry
Definitely came to mind when reading that. I was a Ford brat, and the husband
and I bought when stock was down around the $2 mark. We've made a considerable
amount.

I just finished reading a book about the life of Laura Ingalls Wilder, who
lived through something like 6 different depressions. Given the historic rates
of inflation, innovation, and globalization, I don't really think the stock
market is a bad bet IF you're willing and able to play the long game. The
20-30 years game. Get more conservative as you get older. Yes, still possible
to get screwed, but it's one of many ways to keep options open.

