The World's Three Largest Economies Are in Recession

Phoenix Capital Research's picture

The central dynamic of the last 12 months continues to dominate financial market price action.


That dynamic is:


1)   The global economy is contracting with former engines for growth (Emerging Market economies, particularly China) growing little if at all.


2)   Financial markets continuing to rally/ hold up in hope of additional monetary measures by Central Banks.


Regarding #1, the recent spate of economic data is absolutely awful:


1)   In China, the official growth numbers suggest GDP is growing by 7.3%, however…


China’s electricity consumption suggests GDP growth is 3% at best.


China’s rail freight volume for the first eight months of 2015 fell 10.1% from the comparable period in 2014.


China’s monthly Caixin PMI reading has fallen to levels not seen since March 2009: when everyone thought the world was ending.


August exports fell 5.5% year over year following an 8.9% collapse in July (exports account for 30% of China’s GDP).


Let’s now turn to Japan, where the largest QE program in history was launched in April 2013, only to be increased in October 2014. This was a Keynesian dream come: an amount of spending equal to 25% of GDP.


2)   Since that time, Japan experienced an uptick in economic growth for two quarters before turning back down again. Which brings us to today.


Japan’s GDP shrank at an annualized pace of 1.2% in 2Q15.


Industrial production fell 0.5% in August, after falling 0.6% in July, indicating that Japan is in a technical recession (the country’s second in as many years).


Consumer prices fell 0.1% in August, marking the first drop in two years…suggesting a return to deflation.


So that’s the second and third largest economies in the world teetering on the verge of recession… but what about the largest economy, the US?


3)   In the US…


Industrial production declined in the first five months of 2015. This has ALWAYS coincided with a recession. Currently it is showing zero growth year over year.


As Barclay’s research recently revealed, US corporate profit margins have declined 60 basis points, a reading that has coincided with a recession five of the last six times it triggered.


All four September PMIs recorded sub-zero readings, which only occurs when the US economy is already five to six months into a recession.


a.     Both Regional Manufacturing Surveys and Merchant Wholesaler Sales, imply a recession.


So, the world’s three largest economies, the US, China and Japan are all approaching if not already in recession. These countries represent nearly a third (29%) of global GDP approaching,


Anyone who thinks that somehow this will not impact the rest of the globe is out of his or her mind.


Another Crisis is coming. And this time around, Central banks will have next to no ammo to face it.


If you've yet to take action to prepare for this, we offer a FREE investment report called the Financial Crisis "Round Two" Survival Guide that outlines simple, easy to follow strategies you can use to not only protect your portfolio from it, but actually produce profits.


We made 1,000 copies available for FREE the general public.


As we write this, there are less than 20 left.


To pick up yours, swing by….


Best Regards


Phoenix Capital Research


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-Voluntaryist-'s picture

"The last thing people want to read is another article on gloom and doom. Sure, the world is poised on the brink of one of the worst economic collapses in history. Sure, people are losing their jobs, businesses, homes and even their life savings, followed by hyperinflation to get what's left. Sure, political leaders have sold the people out to special interests..."

LoveTruth's picture

My friends business owners in Los Angeles complain that business this year is bad, down like 40% compared to last year. 

Hitlery_4_Dictator's picture

Oh silly Pheonix Capitol, one day you'll get somethign right

FringeImaginigs's picture

Oh silly silly...  And you disagree with their facts, or you disagree with their analysis, or you disagree with their conclusions, or you just don't like them?  Please do tell, oh silly me.

Hitlery_4_Dictator's picture

Facts are nothing in this manipulated fraud system. THey have been predicting a major high in PM's for years, they have been predicting stock market crash for years. And they have been wrong, regardless of the facts. 

AGuy's picture

Forgot Canada too. Canada is officially in Recession this year


deKevelioc's picture

I take it this is advertising.

Aussie Battler's picture

Central banks are doing the equivalent of drinking more coffee to never fall asleep, eventually the effects gets smaller and smaller as the person gets sicker and sicker.

OpTwoMistic's picture

Hurry,  they are running out of emails.

The Carbonator's picture

The Fed will not allow a healthy correction while Obozo is in office.

If a Non Democrat gets elected then the eCONomy will be allowed to free fall.

AGuy's picture

"The Fed will not allow a healthy correction while Obozo is in office."

The Fed will never allow a correction, ever! The US is insolvent. If the US fell into a depression, the US would no longer be able to service it debt, and forced into default. Fed has no choice but to prop the system up. Recall that Fed prop up started way back in 2001 after 9/11. Fed push rates down to 1%.

Baa baa's picture

Good! Perhaps then we could attempt to wrest control of the economy away from the government. Deep in your heart, you want it to reset.

starman's picture

I fear the layoffs after the holidays will be catastrophic.  I mean seriously look around you. Hedge accordingly. 

tempo's picture

Central banks buy (or fund) the purchase large cap equities,so chart/data/growth/analysis are meaningless. All analyst cut estimates before co reports and then the media hypes that company met estimates and never report revenues and earnings are declining from last year.

logicalman's picture

The 'World's Economies'

What the fuck does that really mean.

“This planet has a problem, which is this: most of the people living on it are unhappy for pretty much of the time. Many solutions are suggested for this problem, but most of these are largely concerned with the movement of small green pieces of paper, which is odd because on the whole it isn't the small green pieces of paper that are unhappy.”

Douglas Adams.


Replace green peices of paper with zeros and ones on hard drives, if you like.

Tense change courtesy of me.

Dragon HAwk's picture

Gloomy Stuff.... and that was the Good News..


Schroedingers Cat's picture

Here's what's very troubling.  The Fed doesn't seem to allow the US to enter recession.  The three other largest economies are going through the necessary and natural healthy purge which always ends, followed by a new beginning and healthy economic growth.  The dollar had a bull run because everyone is rushing into dollars to buy US stocks which are dutifully bouyed up by the Fed.  What  happens when the other three economies turn and investment starts to flow away from the dollar and US stocks?  The BULLshit will hit the fan hard.  

Lockesmith's picture

In what world are China and Japan allowing their economies to go through the naturally required purge?

Global Observer's picture

There is no recovering from this. When it crashes, it will stay down for a long time with all the economic, political and social consequences, which can be catastrophic in the US. All the policies since the 2008 crash had been to prop it for as long as they can, no other motivation. Of course, the crash would be that much bigger when it finally happens, but at least it gives time for those smart enough to recognise it and prepare for it. The rest are gone whether it was allowed to take the natural course in 2008 or later.

Buck Johnson's picture

So true and guess what that is our biggest problem.  If they continue to stop us from having a natural and healthy recession to clean out everything then eventually we will have something that will be even worse and might even physically hurt this country for years aka decades.  Hyperstagflation.


jeff montanye's picture

the fed is not that powerful.  they eased their ass off during the prior two recessions and they still happened.  and those times there were interest rates that could be easily lowered.  history hasn't much in the way of negative nominal interest rates, probably for a reason.

the stock market turned around in '09 because of the legalization of fraudulent bookkeeping for the insolvent banks (mark to model).  it has worked for now but it doesn't really make the banks truly solvent.

of course belief in the fed's omnipotence is a crucial factor in the magnitude of the decline to come. no tree grows to the sky.