{"id":12068,"date":"2015-09-10T06:50:58","date_gmt":"2015-09-10T11:50:58","guid":{"rendered":"http:\/\/olduvai.ca\/?p=12068"},"modified":"2015-09-10T06:50:58","modified_gmt":"2015-09-10T11:50:58","slug":"global-economy-nearing-a-structural-recession","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=12068","title":{"rendered":"Global Economy Nearing a \u201cStructural Recession\u201d"},"content":{"rendered":"<h3 class=\"entry-title\"><a href=\"http:\/\/wolfstreet.com\/2015\/09\/10\/global-economy-near-a-noncyclical-structural-recession\/\" target=\"_blank\">Global Economy Nearing a \u201cStructural Recession\u201d<\/a><\/h3>\n<p><strong>And monetary policies will be \u201cineffective\u201d<\/strong><\/p>\n<p>To the never-ending\u00a0astonishment of our economists, global growth has been much weaker since the Financial Crisis than before it, despite enormous global stimulus from years of extreme central-bank monetary policies and record amounts of government deficit spending.<\/p>\n<p>This should not have happened, according to our economists. Fiscal stimulus and expansionary monetary policies beget economic growth, which beget even more economic growth. That\u2019s the theory. And that\u2019s precisely what hasn\u2019t happened. All it did was inflate asset prices. But the global economy has been a dud.<\/p>\n<p>\u201cIf we calculated global growth with China\u2019s true growth rate and not the official rate, global growth in the second quarter of 2015 would be only 2%,\u201d figured\u00a0<a href=\"http:\/\/cib.natixis.com\/\" target=\"_blank\">Natixis<\/a>, the investment bank of France\u2019s second largest megabank, Groupe BPCE.<\/p>\n<p>This \u201csluggish growth, close to a recession, is due to persistent, structural causes; we therefore use the term \u2018structural recession\u2019 to show that it does not have a cyclical origin,\u201d the report explained. It\u2019s not caused by normal cyclical fluctuations, but by \u201cpersistent structural problems that are specific to each region.\u201d<\/p>\n<p><strong>China loses its cost-competitiveness<\/strong><\/p>\n<p>The problem dogging China is the soaring cost of labor, in an economy that is still too centered on low-end products and exposed to \u201ca very high level of the price elasticity of exports.\u201d Thus, if Bangladesh or Vietnam can produce it a little more cheaply, China loses those exports.<\/p>\n<p>Labor costs have soared in the double digits year after year. Even per-unit labor cost, which compensates for productivity gains, has jumped year over year: in 2015, by 4.5%, which is at the low end; and by over 10% at the high end in 2000-2001 and 2007-2008.<\/p>\n<p>Hence a decline in exports of those products, a weakening of investments, and a sharp weakening of what Natixis calls China\u2019s \u201ctrue growth.\u201d<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Global Economy Nearing a \u201cStructural Recession\u201d And monetary policies will be \u201cineffective\u201d To the never-ending\u00a0astonishment of our economists, global growth has been much weaker since the Financial Crisis than before it, despite enormous global stimulus from years of extreme central-bank monetary policies and record amounts of government deficit spending. This should not have happened, according [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[124,130,3575,312,366,534,1264,8869,4254,4255],"class_list":["post-12068","post","type-post","status-publish","format-standard","hentry","category-economics","tag-central-banks","tag-china","tag-deficit-spending","tag-financial-crisis","tag-global-economy","tag-monetary-policy","tag-recession","tag-structural-recession","tag-wolf-richter","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/12068","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=12068"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/12068\/revisions"}],"predecessor-version":[{"id":12069,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/12068\/revisions\/12069"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=12068"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=12068"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=12068"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}