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IPFS News Link • Economy - Economics USA

Global Economy Will Likely Remain Sluggish Into 2020

• Zero Hedge - Tyler Durden

A global manufacturing recession was sparked by changes in consumer preferences that have roiled manufacturing hubs and complex supply chains in developed and emerging markets. Almost every major central bank across the world is easing at the moment in hopes of generating a mini-cycle trough to rebound growth in 2020. But new data via Fathom's monthly Economic Sentiment Indicators (ESIs) say otherwise, suggesting subdued growth will be seen rather than a significant rebound.

Fathom states that the US ESI has bottomed, with more supporting evidence from the Fathom Leading Indicator (FLI), which suggests a recession could be avoided next year. The November US ESI printed at 2.9%, up from a low of 2.4% in September but still off the 2019 high of 4.6%. The Federal Reserve's massive balance sheet expansion of 'Not QE' and excessive rate cuts have been deployed to thwart a significant downturn with the hopes of a substantial economic recovery ahead of the elections. Data shows stabilization is possible, but a turn up in growth that would support today's lofty valuations in stocks will be unlikely, setting up the real possibility that the Fed has engineered a blowoff top in markets.

Fathom's European ESI shows stabilization in November at 0.3%. Growth in the coming quarters will likely stay subdued across Germany and other major economies in the region. Again, the hopes for a massive rebound in early 2020, if it's the US and or Europe, could disappoint equity investors who've ramped global equities to new highs on to hopes of recovery early next year.