The IMF's Comedy Of Quarterly Errors Reveals The Biggest Hockeystick You Have Ever Seen
Readers are familiar with our quarterly summary of the IMF's laughable forecasts, which we compile after every quarterly release of the fund's World Economic Outlook. Moments ago, the IMF released its latest update for world growth and trade for 2014 and 2015. Since we have said it all already, we will cut straight to the charts.
Below we show the progression of the IMF's quarterly forecasts starting in 2012 and continuing through today. What originally was supposed to be 4.1% GDP growth forecast as recently as January 2013 has, a year and ha half later, been slashed to 3.4%, down from 3.6% in April. As for the increase in 2015 growth forecast from 3.9% to 4.0%, just humor us and laugh.
Things were not quite as dire in Europe where the 2014 GDP forecast was cut by just one tenth, from 1.2% to 1.1%. It will be cut more before the year is over as the reality of Europe's deflation-driven triple dip recession unveils itself.
When it comes to China, there is absolutely nothing to say here. Not even the IMF any longer believes that China will be a source of future global growth.
But the piece de resistance is the following chart of the US 2014 GDP forecast, which was just crushed by 1.1% from 2.8% to 1.7%, an estimate which recently was 3.0%. But where it gets outright surreal is in the biggest hockey stick we have ever seen, because while the IMF admits 2014 will be the weakest year for US growth since Lehman (due to a snow storm no less), it expects GDP to soar from 1.7% to 3.0%, the same forecast it had a quarter ago.
And so... presenting the biggest stick you have ever seen!
Finally, and no humor here at all, where things get serious is that quietly the IMF once again cut its forecast for the all important global trade, this time from 4.3% to 4.0%. This is really all that matters because after the epic slashing to 2013 world trade growth, 2014 it is now 27% below where it was supposed to be as forecast in January 2013.
Why is trade all that matters? Because while the Fed can monetize everything that isn't (and is) nailed down, and can inject an infinite tsunami of liquidity in its failed crusade to grow the economy, it can't print trade. And without trade the globalized world crumples up into a monster that not even its Keynesian mother can love.
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