Might there be a new eurozone-China recession?

Here is the link, developing…


"Biggest fall in exports in two years"

Not to challenge the significance of all of this, but typically when this construct is used the number of years is somewhat larger than TWO.

It's very important to people like Tyler to spend the next 22 months predicting the "coming recession."

After November 2020 it won't be important any more.

I dunno about you, but given the amount I have in equities, all predictions of recession (both inside and outside of the US) are worth looking at. Which is not to say that they're *correct*, of course, but pooh-poohing a slowdown between Germany (supplier to China of production goods) and China (supplier of everything else to somebody) seems foolhardy.

Let's see... Looking at history it is a series of booms and busts. Nothing we do seems to stop this cycle. So I say it is absolutely safe to predict a recession.

Is Brexit not important anymore? the most exciting part is that March 29 comes in 10 weeks and will be welcomed by political gridlock. Extra sauce: the Left likes it too.

In contrast to the EU, which appears to be teetering on the edge of recession the UK just posted a decent GDP growth last quarter. The pound even rose on news that the May Brexit deal has been rejected by Parliament. I am not saying that it will happen, but it would be really funny if post Brexit the UK continues to boom and the EU has a recession.

On 2016, 48% of UK exports went to EU27 countries, data from UK's ONS.

I'd be really curious at how can the UK boom while the EU has a recession.

I pass on the argument from the pro-hard Brexit side - just in the interest of balance since you practically never hear it; https://capx.co/why-an-accidental-brexit-could-be-the-best-thing-for-the-uk/

Good to see the sensible side of the argument. As here, the media tries to present one side of the story, always on the side of authoritarianism.

So, here is one line - 'The bad news is that there is not a lot we can do to prevent the EU imposing an import tax on its own consumers.' Which is funny, in its way, as automobile production intended to be sold in the EU is likely to leave the UK, thus showing how true mercantilists think.

However, let us reword a following sentence to the same standards as the one above - 'In those sectors – the car industry and agriculture – where tariffs are higher, ministers could offer various sorts of offsets to UK exporters that are paid for by UK taxpayers.' Those added 7 words at the end just make clear what the author apparently did not want to point out.

UK leaving the EU isn't really a tariff problem, it is more of a problem about free movement of people.

I'd wish that the UK would go zero tariff after Brexit, but I kind of doubt the sheep farmers and others will buy into it.

Well, I mean, it's possible; EU states with far larger exports as % GDP and larger shares of EU trade were able to boom during last recession. Poland for'ex.

Whether it's likely, that is, there are enough positive factors in the British economy otherwise, is another question.

But it's not like the European economy is "All for one, one for all" in its growth dynamics, even for countries that are far more integrated into it than Britain.

Pound going up may be because the failure to pass the deal increases the odds that Brexit gets cancelled altogether.

Or, maybe just reflecting an inventory build-up in anticipation of hard Brexit?

Certainly explains what is going on the largest industrial sector in the UK, which is the auto industry.

Donald Trump can move world markets with his awesome power and devastating potency. He will conquer China like Kublai Khan and make even greater walls than the Great Wall itself. Opium exports will fall as the Chinese will need it for themselves. Century of Humiliation part Deux coming to a Chinese theater near you!

....."greater walls than the Great Wall ..."
MAGA : Make America Great wall Again ?

Make A Great wall Already

"No way" to Ivanka WB President.

It could be Ivanka for POTUS 2024 and 2028. Then, 16 years of The Donald's elder two son.

And, Barron Trump will be eligible to run the country for the in 2044 election.

It's pretty obvious that this is exactly what's going to happen. Well said.

Gonna be hard with all those FBI investigations going on, they'll get a felony or two. The Trumps should run for office ... in Moscow.


Do recessions raise the relative status of economists? Or at least make economists feel like they are more important for a while?

Is the primary cause of recessions actually economists excitedly amplifying any possible signs of slow downs, tanking markets and making them and their work suddenly relevant to a whole swath of folks worried about losing their jobs and investments?????????

Questions that are rarely asked on this blog.

It would be interesting to see whether any economists predicted the U.S. boom of the last two years. Or if any economists have even questioned why no one predicted the U.S. boom of the last two years.

You are not a regular reader of calculated risk, are you? Though in all fairness, McBride does not make such obviously worthless predictions, as he prefers to stick with data, not punditry, and thus remain in the realm of reason, and not punditry.

Maybe this means he is not an economist?

Does McBride make any predictions at all, or just report data? Data we can get anywhere.

Clearly you are not a regular calculated risk reader either.

'Earlier I posted some questions for this year: Ten Economic Questions for 2019. I've added some thoughts, and a few predictions for each question.

I do this every year to outline what I expect, and then - if the story changes - I can change my view. All of the previous questions were about key parts of the economy; economic growth, job growth, wages, and especially housing.' https://www.calculatedriskblog.com/2019/01/question-1-for-2019-will-mr-trump.html That link has all the other questions at the bottom, if you care to read his predictions.

As McBride clearly does calculated risk because it interests him to do so, he has no need to ride the pundit train, nor any need to care about whether his status/hits is increasing or decreasing. It is certainly true he feels no need to make many predictions, though he can be counted on to provide his own perspective on recessions/growth, contrasting his predictions/expectations with what the media tends to (over)emphasize.

And as clearly explained (a McBride hallmark - the man is definitely not a Straussian of any stripe, nor feels any need to hedge his writing so as to cover as many bases as possible), McBride's predictions are simply predictions which he feels the best he can make, and he will change them as circumstances warrant.

Even more refreshing, he happily admits when he cannot make a prediction based on the data available, though he may provide an opinion or guess in the stead of a prediction.

McBride is certainly not everyone's cup of tea, and it has been quite a while since the volunteer effort that provided a comment section has been active. Doesn't matter to him - unlike some, McBride is not seemingly motivated by the things which appear to cause many economists to have an online presence.

Which just might explain why McBride is such a refreshing economics website, within its scope.

Are his predictions any more accurate than the other pundit's?

Oddly, why don't you do something like search 'calculated risk recession prediction' and then decide for yourself - he has a more than decade long track record, after all. You can click on the Ritholtz link, or check the Atlantic link - 'To understand whether this fateful combination— high debt plus a cooling housing sector—could produce a sequel to the Great Recession, I reached out to Bill McBride, a famously prescient economic analyst and the author of the Calculated Risk blog. “I do not see any signs of a recession in the next six months,” McBride said. “I think the economy is pretty solid. Recently new home sales have slowed due to several headwinds, mostly higher mortgage rates and the new tax policy.” As the Millennial generation continues to pay down student debt and move into its peak-earning years, he predicted “further increases in new-home sales and single-family starts over the next couple of years.” His verdict: a slowdown, perhaps; but not a downturn.

If you’re going to worry, you should worry about three things: exports, China, and maybe the looming shadow of corporate debt. But nothing in the economy seems to predict an imminent recession.

Or at least that was my conclusion before Bill McBride sent me a follow-up email.

“Just saw Larry Kudlow’s remarks. Maybe I’m wrong!”'

McBride has a distinct sense of humor. In case you don't get the Kudlow joke, follow the link, which will also allow you to further compare some predictions - https://www.calculatedriskblog.com/2016/12/larry-kudlow-is-usually-wrong.html

(Let's just say I pay a lot more attention to McBride than either Prof. Cowen and Prof. Tabarrok, entertaining as they both are.)

To be clear, McBride's big claim to fame is calling (along with help from co-blogger "Tanta") the housing crack-up as early as 2006, along with the expectation that it would cause severe economic dislocations. What I do find refreshing is that he has avoided calling a recession since.

I see two potential weaknesses, though to date I think he has avoided any ill effects from them:

1) He spends a lot of time looking at the housing market is particular, which is a meaningful component and indicator, but which might be overweight in his mind given the particular importance it had in driving the events of 2006-2008.

2) Much of what he does is effectively a "now-cast" of the near future based on a few strong indicators. This is very valuable, but I do wonder how quickly he will pick up on inflection points that aren't driven by housing in particular.

...And to update this, McBride talking about inventory increases and Tom Lawler predicting drops in sales, while not a sure-fire signal of anything, is mildly worrisome.

Remember, prior is a troll, and he's just trying to throw chaff rather than provide information. Notice that for all the verbiage and block-quoting, he doesn't ever answer your question or address my points.

For sure, I'm well aware of this mope's methods. He's quite proud of his troll status.

Well, apart from linking to McBride's predictions for 2019, or information concerning the accuracy of his predictions, for example as noted by Ritholtz or the Atlantic.

But who cares about actually reading what is provided or following links. So here is the block quote from Ritholtz - 'McBride & CR were famously dead right — in public, in print and in real time — about the impending housing collapse in 2006, the recession in 2008, the economic recovery in 2009, and the housing recovery in 2010.' https://ritholtz.com/2016/09/mib-bill-mcbride-calculated-risk/

Apparently, the best way to be a troll in the MR comments is to actually provide information, quotes, and links. And when more are provided, it is just further proof of trolling, as clearly facts have no place in any MR comment, at least in the eyes of a number of regular commenters.

And just for you, Tom T., here are the links to McBride's predictions for growth in 2017 and 2018 -



Further, as regular readers of McBride know, he reviews his predictions, in the middle of the year and at the end of the year.

Here is what he wrote at the end of 2017 about his 2017 prediction concerning economic growth - 'GDP was a 1.2% in Q1, 3.2% in Q2, and 3.1% in Q3. It appears GDP will be around 3% (annualized) in Q4, putting GDP growth around 2.6% for the year. About as expected.' Admittedly, that does not sound like the sort of boom you were talking about, but then, McBride is not a MR commenter. https://www.calculatedriskblog.com/2017/12/q4-review-ten-economic-questions-for.html

Trump is the symptom not the disease.
When Economists, Politcians and Academics realize there is no free lunch we may be able to address the world’s problems.

Put simply: Promises have been made that cannot be kept. What we don’t yet know is the nature of the default.

The same way it was in cahoots with the Nazis, Coca Cola now is in cahoots with Chinese officials. Coincidence?!


If so, it will be a pretty bad failure of monetary policy. Neither area is at the zero lower bound. Inflation is below 2% in both countries from what I gather.
If the recession happens, people will blame a bunch of different factors (e.g., the trade war, the yellow vests), but away from the zero lower bound the central banks are responsible for whatever level of ngdp happens. The recovery will have been “murdered” as bernanke would say.

There may be asset bubbles in China. I don't see them in the US or EU, as in 2006.

Enlighten me. How are "yellow vests" among the causes of the next recession? The way I see it, they are reacting to numerous damages (high taxes, high energy costs, low income growth, . . . ) they are suffering from policies shoved down their throats by (failed) bureaucrats, central planners, central bankers.

It's not that they're actually to blame. They're just a convenient political target.

Agreed. Recession in Europe is a policy choice. Loosen up.

Poor old BD, who still thinks economists, governments, money supply can manipulate an economy into or out of a recession. BD has drunk the Kool Aid and believes those little 2D graphs in his Macroecon 101 textbook.

BD is one of the few logical, rational commenters around here.

That being said. Central planners will get it right one (the first) time before the Second Coming of Christ, or maybe not. Until then, they will be granted ever more discretion/powers and prominence with each policy failure. That is their "super power."



Ray Lopez 1933: 25% unemployment is just something that happened.

In the EU the policy elite want deflation, high savings, low investment. You have low wages, countries such as Germany don't have to pay much because they have workers from the east as well as Spain, Portugal, Greece, and Italy willing to come and work for low end salaries. Germany should be the rich country of the EU which mostly consumes and has a strong internal market but instead they basically want to be a China, export oriented, totally reliant on the USA as an export market and to do this it is important for them to keep wage growth and domestic consumption growth low.

Germany's consumption to GDP not actually that low though - https://randomcriticalanalysis.com/2018/11/19/why-everything-you-know-about-healthcare-is-wrong-in-one-million-charts-a-response-to-noah-smith/

Unlike Norway, Switzerland, Ireland.

They're totally addicted to an exports based model fuelled by foreign debt though, even if domestic consumption is not lagging.

In rare public comments, Ren Zhengfei, the founder of Huawei, praised President Trump, calling him a "great president", and said that his tax cuts had helped American business. Ren may have flattered Trump in hopes that Trump would drop charges against his daughter, or Ren may be expressing deep concern about China's and the EU's economies and the need for more expansionary fiscal and monetary policies. https://www.nytimes.com/2019/01/15/technology/huawei-ren-zhengfei.html

How about, "All of the above"?

Is Technogenic Climate Change FINALLY making its belated and much anticipated market entry?

"Might there be a new eurozone-China recession?"

Yes - although we would point out that trade data (as measured by the y/o/y growth rate of its imports from the U.S.) has been signaling a significant deceleration in that nation's economy since late 2017, early 2018 - well ahead of any U.S.-China trade war actions later in 2018, which almost certainly negatively impacted its economy.

At the same time, the U.S. economy largely escaped a similar decline though much of 2018, although it must be asked whether the U.S. economy has only avoided following a similar trend to the Eurozone and China because of the fortunate timing and stimulus provided by the Tax Cuts and Jobs Act of 2017. And now that we're more than one year past, how much longer might that contrary pattern to the world's other major trading regions continue?

Good question. Did the collapse of the Austrian Credit-Anstalt in 1931 (https://en.wikipedia.org/wiki/Creditanstalt) have an effect in causing a bank panic in the USA a few years later? Some think so.

The yawn of Eurasia... Now is time for stimulus, perhaps a bridge across the Caspian or a canal across the Kra?

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