World IP decelerates

My index of world industrial production (composed of the weighted average of the industrial production indices from 50 countries) has rolled over.  That's not the same thing as saying the world is in recession.  Not yet, anyway.  What has rolled over is the year-on-year growth rate--world IP is growing more slowly.  Right now, 70% of the industrial production indices I monitor are growing more slowly than they were  (some are now going negative).  The big positives are the US and Canada, with Mexico also improving in recent months, where IP growth rates are still accelerating.  Europe and the BRIC countries are slowing.

The chart below shows the year-on-year change in world industrial production compared with the percentage of year-on-year rising growth rates of the 50 monitored countries.  This diffusion index, as it is called, tends to lead turns up and down.  If the US and Canada turn down--and the Fed will go on raising the Fed funds until something breaks--the world will be perilously close to a recession.  If the trade wars intensify, a recession will be inevitable. 

I have some more on this, but that's for another post.