Economic 'perfect storm' could lead to U.S. recession
‘The Perfect Storm” is more than a movie (and book) title; it was a real meteorological event. In October 1991, Hurricane Grace, moving north along the East Coast, collided with a massive southbound low-pressure system from Canada. Result: A storm of record-setting intensity that created high winds and waves in excess of 80 feet high just offshore in the Atlantic Ocean.
China could set a perfect storm in motion that would create destructive waves of its own, including a recession for the U.S.
The perfect economic storm might begin with a low-pressure area. China’s economy now fits that description. Its GDP growth rate has tumbled significantly over the past few years and there is a long list of problems that must be solved to get the situation turned around. Near the top of that list would be its aging, less-productive labor force and the stalled level of foreign trade. And, certainly, the disappearing wage differential and the increasing discomfort of foreign investors with the bureaucratic obstacles and restrictions do not help matters.
China is an economic force. By some measures China’s economy surpasses ours. How that was achieved, though, may create swirling currents of stress as its economy tries to recover from a developing low-pressure system fronted by a precipitous drop in both output and productivity.
The rapid growth of the Chinese economy was fueled by debt, both private and public.
Household debt in China, as a percentage of household income, is considerably higher than in the U.S. or any other developed economy. And public debt, which was used to sustain and bolster the economy each time it faltered, is at a troubling level. Bond rating agencies and other financial analysts are wavering between skeptical and nervous about China’s debt picture and are particularly worried about the country’s municipal debt and the private sector’s bond quality. Bloomberg called China’s municipal and local government bonds a “time bomb.”
-more-
https://www.heraldnet.com/business/economic-perfect-storm-could-lead-to-u-s-recession/?utm_source=DAILY+HERALD&utm_campaign=54f2e389e6-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_d81d073bb4-54f2e389e6-228635337
= new reply since forum marked as read
