One does not have to look too far or to be an economist to understand that there is the real danger among the world’s economies of a near future recession. On the one hand, you have the negative results of the U.S. tariffs on China, Europe and Canada. On the other hand, Brexit is already damaging the British economy, and the possibility of a no-deal with the European Union is a definite chaotic possibility.
Meanwhile, Japan’s economic growth is stumbling, particularly as trade with one of its biggest customers, China, is in trouble. China is the biggest driver of global growth, so its slowdown — or fear of it — is stoking concerns about the prospect of a worldwide recession. Japanese consumer electronics and automotive companies that depend on their fast-growing neighbour — China — are now slashing profit forecasts and considering idling factories.
Donald Trump’s administration, in the meantime, is all over the map. There appears to be no end in sight in the trade negotiations with China. American and Canadian farmers — especially those with seed crops like canola — are already feeling the pinch as a result of losing the once profitable Chinese market.
While a global recession may not be as horrendous as that in 2005, the fact is that governments and central banks today have fewer tools to deal with it. Governments in North America and Europe have run up enormous debts in recent years. Consumers also have run up huge debts over the last decade in light of extremely low borrowing interest rates. Moreover, there is little wiggle room for governments to respond proactively. The growth in Gross Domestic Product (GDP) is declining everywhere. National unemployment rates are still low, but for the wrong reasons. While there are too few skilled workers for those trades and professions needed in our modern economies, people are being forced to take lower skilled and lower paying jobs in the retail and service industries. Average wages for the middle class have not increased adequately when inflation is taken into account, while family debt loads continue to go up. Given that they drive over 70 percent of annual GDP growth, don’t expect consumers to help get us out quickly of the next recession. As politicians like to say, people are going to have to tighten their belts! The question is — for how long?
FROLITICKS 
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