Risks heavily weighted to downside, in newest WEO, released today:
Risks heavily weighted to downside, in newest WEO
Not good news except for our resident RECESSION cheerleaders. Oh wait the head cheerleader Princeton Steve has already told us that the people who compile these forecasts are all incompetent. Never mind!
Let’s reasonably assume that the US economy had reached potential output at the beginning of 2022 and that potential GDP grows at 2% per year. WEO is saying the US will grow by 2.5% in 2022 exceeding potential (oh my INFLATION) and then grow by 1.4% returning to potential. So this forecast could be seen as good news if it works out as expected. But SHHH – don’t tell our new three stooges (Princeton Steve, Bruce Hall, and JohnH) as this will ruin their day.
For the ‘blame Biden’ crowd, note China’s growth is marked down substantially since the prior estimate, along with the I.S., and that both countries are forecast to continue growing.
For the ‘Russia’s doing great’ crowd, note Russia is the worst performer in the list. Don’t bother with the ‘They got the forecast wrong!’ bit. Russia’s economy is in bad shape and getting worse.
Thanks for noting that about Russia as I missed that pre-occupied with something else I’m working on. On China – you may have motivated our host’s next post.
More locally, my observations are mixed. Traffic is getting more impossible around Seattle. Traffic declines during a recession. I guess fuel prices aren’t that important out here on the left coast, even though most of the vehicles on the road are not electric or hybrids.
The pace of apartment and townhouse construction doesn’t seem to have fallen off just yet, although there is one development near where I live that’s standing vacant with no takers. The cramped townhouse units would have been snapped up right away a year ago. A large project downtown is now on hold after a few months of work, due to market conditions and labor/material supply issues.
I still see “help wanted” signs nearly everywhere, and my company is trying to hire specific individuals for specific roles and cannot find them to train. Labor is still plenty tight.
So, my observation is that the strains in the rest of the world aren’t having much effect on the local economy just yet. China seems to have some pretty serious problems for now, and I think we can pretty much write off Russia as an economic player for the foreseeable future. Russia’s games with natural gas will hurt Europe, but probably not the United States.
This is the pathological optimist being pathologically optimistic about the US economy
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