Economists are already predicting “the world’s lowest growth in a decade”, but it is beginning to look like what we will be facing will be much worse than that.
In recent days, numbers have been coming in from all over the planet that are absolutely abysmal. The “global economic slowdown” is rapidly transitioning into a new global economic crisis, and central banks seem powerless to stop what is happening. They have already pushed interest rates to the floor (actually below the floor in many cases), and over the past decade they have absolutely flooded the global economy with new money. But despite all of this unprecedented intervention, economic conditions are deteriorating at a pace that is breathtaking.
Let’s start by taking a look at what is happening in India. According to CNN, vehicle sales in India fell a whopping 31 percent in July…
Just two years ago, India’s huge car market was booming and global players were rushing to invest. Now it’s been slammed into reverse.
Sales of passenger vehicles plunged 31% in July, according to figures released by the Society of Indian Automobile Manufacturers (SIAM) on Tuesday. It’s the ninth straight month of declines and the sharpest one-month drop in more than 18 years, SIAM Director General Vishnu Mathur told CNN Business.
Those are numbers you would expect to see if we were in the middle of a full-blown economic depression, and it is being projected that this downturn “could result in a million people being laid off”…
The slump has prompted companies to slash over 330,000 jobs through the closing of car dealerships and cutbacks at component manufacturers, Mathur said, citing data from industry associations that govern those two sectors.
The Automotive Component Manufacturers Association of India warned in a statement last month that its “crisis-like situation” could result in a million people being laid off.
A million jobs is very serious.
And we are talking about just one industry in one country.
How many jobs will ultimately be lost all over the world in the months ahead?
Over in China, the auto industry is also deeply struggling…
China’s Geely (GELYF) revealed this week that its net profit probably plunged by 40% in the first half of the year as the world’s second largest economy slowed. In June alone, its car sales fell 29%.
That isn’t supposed to happen in China.
For decades, China has been one of the primary engines of global economic growth, but now things have changed dramatically.
Perhaps you can blame the trade war for what is happening in China, but the auto industry is also in big trouble in Europe. In fact, some of the biggest automakers in the world are closing European factories and ruthlessly slashing jobs…
Ford is cutting 12,000 jobs and closing six plants in Europe, including an engine factory in the United Kingdom. Jaguar Land Rover, which is owned by India’s Tata Motors (TTM), is slashing 4,500 jobs. Honda is also closing a plant in the United Kingdom.
If those companies expected the European economy to bounce back in the foreseeable future, they would not be making such moves.
But just like you and I, they can see what is happening to Europe’s economy, and on Monday we just received some more deeply troubling news. The following comes from Zero Hedge…
Weakness in euro-area manufacturing hit a climax this morning as German private sector activity plunged to a seven-year low. The Germany Manufacturing PMI slumped in September, dropping to 41.4, down from 44.7 in August, printing below the lowest sellside estimate (consensus of 44.4); worse, the German manufacturing recession is now spreading to the services sector, where the formerly resilient services PMI also slumped from 54.8 to 52.5, also missing the lowest analyst estimate, and collectively, resulting in the first composite PMI print below 50, or 49.1 to be precise, since April 2013. The rate of decline was one of the sharpest in seven years.
It appears that the German economy has already entered recession territory, and these new numbers are not causing anyone to be optimistic.
In fact, “abysmal” is hardly strong enough to describe these absolutely horrible figures…
Flash Germany PMI Composite Output Index (1) at 49.1 (Aug: 51.7). 83-month low.
Flash Germany Services PMI Activity Index(2) at 52.5 (Aug: 54.8). 9-month low.
Flash Germany Manufacturing PMI(3) at 41.4 (Aug: 43.5). 123-month low.
Flash Germany Manufacturing Output Index(4) at 42.7 (Aug: 45.8). 86-month low.
Of course the U.S. economy has been slowing down for quite some time now, and if you doubt this, I encourage you to read this list of 28 alarming facts about our economy that I posted earlier this month.
We haven’t seen economic conditions like this in the United States since the depths of the Great Recession, and many believe that what is coming will be far worse than the last time around.
And we may be deep into the coming crisis far sooner than many were expecting. In fact, David Rosenberg of Gluskin Sheff is adamant that there is “a recession coming in the next 12 months”…
David Rosenberg, the Gluskin Sheff chief economist and strategist, is warning that a recession is coming. Rosenberg says economic growth in the United States will turn negative sooner than most investors anticipate and the Federal Reserve is powerless.
Even if the central bank lowers interest rates to zero, a recession will still grip the U.S. within 12 months, Rosenberg predicts. “There’s a recession coming in the next 12 months,” he stated with fact last Thursday on CNBC’s “Futures Now. The Fed just lowered its benchmark interest rate last Wednesday by a quarter-point and Fed Chairman Jerome Powell signaled rates would only be cut again if there’s new evidence the economy is softening.
If things really start to deteriorate in the months ahead, we could be in the midst of a horrible economic downturn by the time the U.S. presidential election rolls around.
Let us hope that is not the case, but right now things certainly do not look good for the U.S. economy or for the global economy as a whole.