At Bloomberg Justin Fox ruminates over whether the incipient global slowdown actually is different:
He presents several different pieces of evidence:
- Flat global trading volumes
- The slowdown may be accelerating
- Population growth is slowing
- The transition to a services economy
- Peak light vehicle sales (at least in the U. S.)
- Declining per capita energy production (at least in the developed world)
I don’t find any of those convincing, each for a different reason but the only one I’ll expand on is the transition from goods to services. First, in the U. S. the demand for goods is still increasing. If you don’t believe me, go over to the St. Louis Fed’s FRED site and chart it out yourself. Real durable goods plus non-durable goods continues to increase (whether per capita or overall). That’s an effective refutation. Despite the claim I’ve read here and there that all earthly wants have been satisfied, people somehow still keep wanting more. And if it’s true here it’s got to be true in China and India (where most of the world’s poor people live).
I also don’t see why if we didn’t want more stuff that still couldn’t translate into growth increasing indefinitely.
What I really think Mr. Fox is seeing is laziness. We’ve come to rely too heavily on credit, the sugar high of economy development. The U. S. is overextended and we haven’t saved enough over the last half dozen years to fill the void and now China is about tapped out, too.
Nobody really has any idea of China’s credit problems. Its banking system is too opaque.
