Bob Baur
With the U.S. expansion reaching almost seven years of age, business balance sheets worsening and credit market debt to equity increasing, there is mounting concern that we are headed towards another economic recession.
Principal Global Investors have released their latest economic insights paper by Chief Global Economist, Bob Baur, and Senior Global Economist, Robin Anderson, looking into the elements underpinning a loss of confidence and lack of stabilization in credit markets.
Key insights include:
- Plunging oil prices, combined with a surge in the U.S. dollar have resulted in symptoms characteristic of a recession. The major risk now lies in sentiment, with the threat of households catching onto potential corporate sector weakness effectively disabling any real income gains from keeping up confidence and spending.
- January saw the labor marketing tightening, with U.S. payrolls reducing to 151,000 from 190,000 and the three-month average dipping down to 229,000 from 278,000, suggesting the Fed was right
- Volatile markets worried those in a tightening mode, driving the convergence of central bank policies and forcing rates down around the world