What Will Cause The Next Recession – Jim O’Neill On The World Economy

What Will Cause The Next Recession – Jim O’Neill On The World Economy

I’m very pleased and happy with my life as an economists but, you know, we can be dangerous people. Three things: First of all, by definition, predicting
those kind of things is extremely difficult, and as a number of economists have famously highlighted Paul Samuelson’s observation that, you know, economists have predicted eight of the last four recessions or something like that is true. Secondly, however, all the high
frequency cyclical indicators that I helped develop as part of
Goldman Sachs’ proprietary global leading indicators are ones I
still follow every month. And for many months, most of them have
been slowing down so that the world economy is definitely slowing down. Some of it a
little bit worryingly so. I don’t think they are suggestive of
some kind of recession, but they are, they certainly suggest that if there’s now
some big global shock that the risk of a significant slowdown, stroke,
recession is higher than it’s been for some time. So policymakers need to be careful. And I have to say in that regard,
I’m the camp plays pleased that the Fed made this rapid shift away from
its strong, clear timing binds towards neutral. I think
that’s very sensible. It looks to me to the major in the world, we’ve gone
from having central bank leaders that were sort of very
academic economists led to much more pragmatic leaders,
including the Fed certainly and the ECB with Mario Draghi and definitely the
Bank of England with Mark Carney. And I think that’s a
good development. If for some reason inflation did now start to
pick up sharply, just as we’re all beginning to think it’s never going
to even with strong levels of employment, that would be a real
problem because then central bankers would probably have to consider
tightening despite slowing, slowing growth. And that would make a
recession a lot more likely. If something went really, really badly wrong
in China that would be as bad as it could get on simple back
of the envelope calculation I’ve made. About half of all the nominal GDP
that the world has had since 2010, has come from China. Who knows? You know, I think
economics is a social science. However, because there doesn’t appear to
be any real signs of inflation picking up significantly. There are things that policymakers can do,
including in some, but not in the U.S., but in some places that we’re seeing
in China be more aggressive on fiscal policy. Germany seems to be thinking about it. So I think the risk of it in the next six months or so is not high. The most important thing for the world now is the rise of the Chinese consumer, which the U.S. is likely to really benefit from. Not to suffer from because it means great opportunities for branded American companies as we see with the likes of Apple. But I can I think the some of the issues that the Trump appearance, and the spread of this kind of mood and in so many parts of Europe, you know, they’re warranted because if the only real winners of globalization are the CEOs of Western companies and the, you know, the shareholders. Then what is the point of all of this? And so I think some of it is warranted, but I don’t see it in a sense of, well, that means we have to stop these countries, you know, taking themselves out of poverty and becoming wealthy. Oh, I know I do, I do worry that there are some Western policy makers that actually do think it’s a pure zero sum game. But, you know, we shouldn’t have to be. And I hope this becomes more of the focus going forward. I do believe personally that globalization and international trade, are if domestic policies are pursued sensibly, a genuine thing that lifts all boats all over the world. And most importantly, and this gets lost so easily, we because of primarily China and India, but also parts of Latin America, we are living through an era of the biggest decline in global inequality. There’s greater inequality within countries. But that’s because of bad policy in those countries. By far and away the single most important thing in the world economy. full stop is the rise of the Chinese consumer. The slowdown recently in the Chinese consumer is of some concern, in my view, because if that is the beginning of reversing what’s been a slowly rising trend this decade, that would be of considerable concern. And you can see evidence of it already. Germany has been so successful at exporting things to Chinese consumers, has slowed down sharply the past six months. And I think the biggest reason is because of the slowing in China. So the single biggest issue for the world economy and certainly for many international companies and with it markets is that, is that is what’s going on with the Chinese consumer. And I think secondly, more broadly, ultimately over the next decades, two, I’d also suggest the same about the consumer in some other big populated emerging places like India and possibly some of the big places in Africa, particularly ultimately Nigeria. But does does further down the road, particularly for China. I find it laughable that people still talk about emerging markets in the financial world in such conventional ways. I mean, you know, China, China growing at 6.8%, sorry 6.6%, which it did last year. And if it grows by 6% this year, sort of we’ll have the… It’s like, it’s like the equivalent of Germany growing by, let’s say, 18%. You know, people talk about China as an emerging market, it’s sort of ridiculous.

54 thoughts on “What Will Cause The Next Recession – Jim O’Neill On The World Economy


  2. the reduction in global inequality and the increase of inequality within countries are strongly correlated. it is just amazing that this is so overlooked by all these pundits and politicians

  3. I stopped listening when this rich fool said 'there is no inflation'! He obviously does not do his own shopping. Most packaging has been deliberately made smaller yet the prices stay the same. In real terms, we are paying 30 – 50% more for food & produce than we were 10 yrs ago. Yet no wage rises above the CPI!!??

  4. Why, with a slowing economy, would the Fed raise interest rates to deliberately contract the economy, unless you're really the evil conspiracy Illuminati bankers everyone says you are? Raising rates in such an environment will ensure that unemployment increases and people suffer. Inflation is not a serious threat to the economy, nor is a tight(ening) labor market; these are good, healthy things that people at CNBC would rather destroy. Fkn why?

  5. Isn't saying that the most important crux to the global economy is the Chinese consumer and also saying that inequalities in individual countries a result of domestic policy, together placing the weight and blame of any possible global recession in the short run on Chinese policy and China in general? Is that true?

  6. It’s already written. All pointing to the return of Jesus Christ. The next time the economy collapses will be the last time. This is the truth. We will have brought it on ourselves thru greed and corruption. God’s patience won’t last forever. Repent!

  7. I also believe recession will happen in next six month but the problem is people do not have much choice for investment other than equity market. Property price is too high and fix deposit interest rate is very low. But still chance of stock market crash is high.

  8. Buffet said do exactly opposite on what the media is telling you ive noticed that the main stream media are keep emphasizing the possibility of next recession and stocks are still in bull market if you believe main stream media you will miss out on this opportunity

  9. In China, car sales and property sales are down by at least 40% since Dec 2018. Initially, it was attributed to the US-China trade war. But independent economist Andy Xie has long pointed out that Chinese households are overly índebted already, racking up household debts to more than 125% of disposable income. Given the onerous household debt and high property prices that Chinese households are saddled with, it's easy to see why demand from Chinese consumers for global goods will remain depressed for years to come. Not even the recent tax cuts in China will make a difference. MNCs selling to China should expect earnings recession for a long time. Chinese consumers are not coming back to life, nor save the world anytime soon. Now go and blame it all on Beijing and PBoC's flawed monetary policies these last 10 years. And for.thise who are following China's economy closely, the independent economist Andy Xie has been banned from speaking to the western media. He is under house arrest for telling it like it is.

  10. If the Chinese economy as long as well because America isn't buying all them their stuff how in the hell could China become a consumer-oriented nation America's put themselves out of work by not protecting themselves and buying all the cheap stuff American companies did it to themselves as well companies like Ford Motor Company would not only abandon their employees when they purchase the cars but failed to honor warranties anyhow why should I buy a Ford I bought a Camry

  11. The global economy's impending inequity is inevitable. Any country which takes actions to raise equity for its citizens will pay a price in terms of their economic growth.
    We are all held hostage by the system, and the reliance on its competitive structure means we are all forced to take part in this race towards iniquity, because it is far better than mass poverty of the population caused by not taking part.

  12. Why is the economy slowing down ? Cause 2% own 90 % of all the wealth not since slavery has the income gap been so great . After they buy all the mansions , jets , yachts what do they do ? They park the $$$$ in a swiss bank which means less $$$ in the system for everyone else . They're has to be limits to how big a mega corporations can get and drive out all competition and how many billions one person can have ( more $$$$ than they could ever spend or need ) , Which is better for the over all economy ? One person has a 100 mill mansion a 80 mill yacht or thousands have a 200 k house a 20 k boat which one creates more jobs and better standard of living for everyone ?

  13. The US has been promised "any time now trade with China will become more free and fair" as the Chinese consumer gets richer and buys more Amercian goods. It NEVER happens. The trade deficit only widens the richer China gets and the CCP keeps throwing up roadblocks to US companies trying to sell in China. We are only freely allowed to sell them soy beans and corn like a banana republic colony. Forced transfer of technology via forced Chinese corporate partnership continues. Cyber IP theft by China is still rampant. Screw these globalist elite "economists" trumpeting global GDP growth and "free trade" when the staus quo on trade is killing the American middle class and only benefitting the top 1%. .

  14. Those at the top have been too successful at scooping up & keeping all the assets. The monetary system that started with early man bartering and trading has reached critical mass in our lifetime. It CANNOT be sustained when it crashes again.

  15. His words doesn't give any indicators, I didn't get what he want to say. He just talked about two side of economy.

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