The possibility of a deep recession in the US in the months ahead is now almost a foregone conclusion. In the US retail establishments in the post-Christmas period are struggling to keep their doors open. Indeed several major retailers, including Sears (which is in bankruptcy talks) are shedding stores. Automobile manufacturers are slashing production and jobs. And the housing market remains weak with mortgage rates at levels not seen in quite a while.
Adding to the possibility of a recession is the Trump government shutdown which has kept almost a million government workers from receiving their regular pay. While this will have only a minor impact on the overall economy it may be enough of a psychological factor to push the economy into reverse.
An important factor in the government shutdown is the fact that key economic statistics will remain unreported until the government has overcome the wall impasse. Departments, such as Labor and Commerce will not report major statistics, data that is essential for companies to conduct their business.
Meanwhile, the US is not the only country flirting with a recession. Brexit is by no means a done deal. If anything it looks more and more like a lost cause. The latest news reports, which say that British firms are shifting a trillion dollars’ worth of assets out of London, most of it to Frankfurt, is a clear signal that Brexit probably is a major disaster for the UK.
It looks very much like PM May is going ahead with her Brexit plans. But, in light of the massive asset departures from London will Parliament go along with the Prime Minister? More than likely Parliament will go with PM May. The men and women in the Lower House are mainly brain dead and will do the bidding of their leader. So we can surmise that PM May’s plan will pass on January 15, the date the voting is scheduled.
There is no doubt that Brexit will be a disaster for the UK. There will be a massive recession if not depression and politically it is possible that Great Britain as it is configured today will cease to exist. Whether the monarchy will survive is also questionable.
In Asia, China’s economy is showing major soft spots, a development that should make itself felt on the rest of the continent, especially Southeast Asia. Japan remains on a growth path but a weak one.
The Trump tariffs are not helping. They are adding to the recession fears and are slowing the flow of goods across borders.
When the recession will be felt full force is not yet clear, but it will come by summer.