10/26/2004: Your "Oh, shit!" moment of the day....
can be found here.
Cutting our global forecast. As the odds of a full-blown oil shock rise, we have little choice other than to cut our global growth forecast; our first revision is a relatively small one -- we are reducing our 3.9% estimate of world GDP growth for 2005 by 0.3 percentage point to 3.6%.Let me repeat that....
Global "stall speed". The annual growth numbers mask important shifts in our forecast of the quarterly pattern of world economic growth; in the first quarter of 2005, our new forecast puts combined growth for the US, Europe, and Japan at just 1.5% -- a "stall speed" that could easily give way to outright recession.
Two-engine vulnerability. With China's authorities reluctant to deploy traditional measures of policy restraint, an overheated Chinese economy is veering toward a boom-bust endgame; the September US labor market surveys underscore the tough pressures bearing down on over-extended, energy-shocked American consumers.
Tough combination. There are two key preconditions to a recession -- the stall speed and a shock; for a two-engine world that is lacking in alternative growth offsets, the downside risks of an oil shock are even more serious -- prompting me to maintain my view that there is a 40% probability of global recession in 2005.
"...there is a 40% probability of global recession in 2005."
And how much you want to bet Bush will blame Clinton for it?
Len on 10.26.04 @ 12:29 PM CST