As the economic news from the eurozone improves by a notch — although not in Greece, inevitably — US consumers are sending the opposite signal.
Sluggish retail sales in the first quarter were purportedly caused by a cold snap. There would be a spring bounce, investors assumed, as a supposedly confident US public spent their savings from lower oil prices.
However, that did not happen last month: Wednesday’s figures were flat, and the weather-related explanation is wearing thin. Indeed, if the US public prefers to use excess cash to pay down debt, it is hard to see why they would change their minds now.
Oil prices have started to rise again and long-term bond yields are also growing, reducing opportunities to remortgage at cheaper rates.
Economists assume this “soft patch” for the US economy is now worrisome enough for the US Federal Reserve to postpone its attempt to raise interest rates again. A hike next month is seen as a non-starter, so it would be in September at the earliest.
However, what if the run of weak numbers points to something more severe? As if on cue, HSBC economist Stephen King on Wednesday published a weighty analysis titled The world economy’s titanic problem that pointed out that it has been six years since the last US recession.
“If history is any guide, we are probably now closer to the next one,” he said.
King’s point — which explains the Titanic reference — is that policymakers are out of lifeboats if recession were to arrive. The Fed has dealt with past recessions by cutting interest rates by at least 5 percentage points. That is obviously impossible today because rates are still at very low levels.
To change the metaphor, the arsenal is bare.
“Whereas previous recoveries have enabled monetary and fiscal policymakers to replenish their ammunition, this recovery — both in the US and elsewhere — has been distinguished by a persistent ammunitions shortage,” King wrote. “This is a major problem.”
The report considers alternative policy options — everything from more quantitative easing to fiscal stimulus to “helicopter” money — before concluding that only one option is likely to lead to economic success.
Unfortunately, this is the politically “implausible” idea of increasing the retirement age.
It is a depressing read, not least because there are plenty of potential recession-triggers beyond a fragile US recovery — a downturn made in China, for example.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy