The chart shows the GDP-weighted averages for manufacturing (blue-dotted line) and services (red-dotted line) PMIs, as well as their average (green line). The big 8 are: the US, the Euro zone, China, Japan, India, Russia, Brazil and the UK, and together they make up roughly 70% of world GDP.
It is typical that after a deep recession, economies rebound sharply, but after a "soft landing", where growth doesn't actually go negative, economies take more time to get going. Look for example at the pattern during the Euro crisis, and compare that to the rebounds after the GFC and the Covid crash. This seems to the pattern now.
We avoided a deep recession thanks to US deficit spending stimulus with the IRA act, and because of revenge spending on services (experiences like eating out, travel, holidays and shows) after covid lock-ups were ended. But precisely because we avoided a deep downturn, the economy is unlikely to bounce strongly from its lows. Eventually, falling interest rates will engender a stronger recovery, but the lags between changes in interest rates and the economy are long.
So:- no recession, but for now, a slow recovery. I expect 2025 to be a year where growth picks up, but not rapidly, as it did in 2013/14. After that, Trump's tariffs will play havoc with the world economy.
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