Weakening Global Economy Spreading To U.S. Economy As Virus Multiplies

October 26, 2015 Facebook Twitter LinkedIn Google+ Economic News

October 26, 2015

For some time economists, investors and consumers in the U.S. have acted as if the slowing global economy wouldn’t have much of an impact on the U.S. economy, presumably because it is driven primarily by consumer spending, which accounts for about 70 percent of GDP.

Increasingly, the data reveal this isn’t the case, as many metrics confirm there are a growing number of areas of the U.S. economy showing signs of economic contagion from the rest of the world.

Among the more obvious weaknesses are slowing job growth, low inflation, manufacturing on the verge of contraction, stagnant wages, and the latest: declining retail sales.

In the midst of all that, the latest preliminary consumer sentiment index from the University of Michigan showed it has climbed by 5 points year-over-year for October. There’s a huge disconnect here that investors at minimum, need to dismiss, in order to get an accurate reading on the economic conditions we really face.
U.S. retail sales

An interesting contradiction in all of this is consumer sentiment has risen, while at the same time retail sales in the U.S. dropped to only a 0.1 percent gain in from August to September. This is one of those disconnects that has to be taken into account.

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