I often forget that though I have lived through the events depicted in my charts, others haven't. The chart below shows my calculation of the "Big 8" GDP-weighted PMI, which, coincidentally, covers about half my career in the financial markets.
So, the events: the 2001 recession, the GFC (2008/9), the euro crisis (2012/13), the 2015/16 pause, the 2016-17 Trump tax boom (nothing like deficit spending to give a growth sugar rush), the 18/19 slowdown as fiscal stimulus faded, the 2020 Covid crash, the 2020/21 post-Covid rebound with massive monetary and fiscal stimulus, the inevitable hangover in 2022/23 as fiscal stimulus faded, and interest rates were hiked, and war pushed up inflation, and now, the 2024 recovery.
My guess, after nearly 50 years in economics and the markets? The recovery will continue. But it won't be the steep slope of the post-covid recovery, but something shallower. Which will stop CBs raising rates. Will they cut rates? Some will. Most will --- because inflation is drifting lower and growth won't be fierce enough to push it back up again. But inflation will be sticky downwards, for reasons I'll discuss in another post. So the rate cuts won't be very large.
(Data through May 2024; the Big 8 are the USA, China, Japan, Euro area, India, Russia, Brazil, the UK, and they make up +- 70% of the world's economy.)
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