Last week I wrote that "it's a good thing we're in a recovery and there's no real prospect of another downturn (at least that's what Wall Street 'strategists' and politicians keep telling us)." Otherwise, a variety of negative reports about conditions in this country (which I cited in the article) "might be a cause for concern."
I'd add that it's an even better thing that economic woes overseas are unlikely to have any real impact on the pace of growth in the U.S., as "economists" and other so-called experts have been reassuring us since the Great Recession "ended." Otherwise, reports like the following might be an even greater cause for concern:
"McDonald’s Sees Downbeat Consumers World-Wide" (Real Time Economics)
New McDonald’s CEO Don Thompson says consumer confidence has become a problem in most markets around the world, pressuring the company to “crank up” its focus on value, even though such a move weighs on margins.
“We are seeing more markets that have consumer-confidence issues and at what we consider to be more-substantial levels,” he said during the company’s second-quarter earnings conference call.
“This is one the first times where we have seen it in a much broader-based perspective. It’s a little bit more than a European cold.” CFO Peter Bensen added, “The magnitude of the issues in Europe are having ripple effects around the world,” hurting consumer confidence and causing fewer people to eat out.
"Global Economy in Worst Shape Since 2009" (Associated Press)
Mounting fears about Spain's financial health help illustrate why the global economy is in its worst shape since 2009.
Six of the 17 countries that use the euro currency are in recession. The U.S. economy is struggling again. And the economic superstars of the developing world — China, India and Brazil — are in no position to come to the rescue. They're slowing, too.
The lengthening shadow over the world's economy illustrates one of the consequences of globalization: There's nowhere to hide.
China’s economic outlook was cut by Japan, its biggest Asian trading partner, as the Shanghai Composite Index fell to its lowest level in three years on concern about faltering domestic demand and export growth.
“The slowdown in the global economy is becoming more widespread,” the Cabinet Office said in a monthly report released in Tokyo today. Song Guoqing, an academic member of a monetary policy committee, said July 21 that China’s expansion may be 7.4 percent, the least since the first quarter 2009.
Enlarge image Japan Sees More ‘Widespread’ Global Slowdown With China Cooling
Japan’s increased pessimism echoes that of the International Monetary Fund, which lowered 2013 global growth forecasts this month on Europe’s debt crisis and slower expansions in emerging markets from China to India.
"IMF Warns of Rising Risks to Global Economy" (Agence France-Presse)
WASHINGTON — The International Monetary Fund stepped up its warnings Monday on risks to the global economy, mainly from the crisis-mired eurozone, as it trimmed its growth forecast for the rest of the year.
IMF economists said that the frail situations in Spain and Italy especially could quickly turn worse amid market doubts over eurozone leaders' resolve in implementing pledged reforms.
But they also pointed to the US "fiscal cliff" trajectory which, if not corrected, could crunch the US economy and heavily impact the rest of the world.
"In the past three months, the global recovery, which was not strong to start with, has shown signs of further weakness," the fund said in its quarterly economic forecast.
"Financial market and sovereign stress in the euro-area periphery have ratcheted up," it said, while growth has fallen below expectations in a number of major emerging-market economies.
If policy reactions in major economies remain inadequate or too slow, the IMF said, fissures could deepen, they added.
"The main risk is obvious," IMF chief economist Olivier Blanchard told reporters.
"Rio Tinto Warns on the Global Economy" (Ninemsn)
Rio Tinto had mixed news for investors when it released its second-quarter production statement.
On the plus side, iron ore, which accounts for over three-quarters of its profits, saw record first-half production. But the comments of Rio Tinto chief executive Tom Albanese on the global economy were less inspiring:
Global economic conditions and sentiment dropped markedly in the second quarter. We are keeping a close eye on the pace of the US recovery, the continuing eurozone crisis and the impact of efforts to stimulate the Chinese economy on the markets that we serve.