Courtesy of Mish.
Last week I received an interview request from Guillermo Barba, a Mexican economist and financial blogger writing for Forbes Mexico.
Barba is a follower of the Austrian school of economics. He has also interviewed Jim Rogers, Hugo Salinas Price, Simon Black, Steve Forbes, Jim Rickards, and others.
The interview is below. It is also on Forbes Mexico , in Spanish at Un día del juicio global nos espera: Mish Shedlock.
GB: Mish, you are one of the top financial bloggers in the World, you offer always a different point of view from the mainstream media. Please, tell us about the US economy. Is it good shape or on the verge of a new recession?
Mish: US GDP contracted at a 0.7% annualized in the first quarter. For discussion, please see First Quarter GDP -0.7%; GDPNow Second Quarter Forecast +0.8%; Economists Get Zero Accolades; Smoothed Recession Odds. I was one of very few who outlined that possibility early, back in January in fact. See Diving Into the GDP Report – Some Ominous Trends.
The Atlanta Fed GDPNow Model now suggests 1.1% annualized growth. Should consumer spending falter, and I believe spending will falter, the GDPNow forecast will be on the high side. Even if the GDPNow model is accurate, we are talking first half GDP of 0.3% or so, well below the stall speed.
On June 4th we learned Nonfarm Productivity Collapsed Greater Than Expected 3.1%, Unit Labor Costs Rose 6.7%. That is not good for hiring prospects.
On June 2, the US Census Report showed Factory Orders Down 8th Time in 9 Months; Durable Goods Inventories Highest Since 1992.
Economists say this is transitory, but they have been saying that for nine months!
GB: China, the Euro Zone, Japan and now the US seem to be in financial and economic trouble. What can we expect for the global economy? What will be the consequences for emerging markets like Mexico?
Mish: The global economy is clearly slowing led by Asia and the US. Europe has seen some improvement recently, but it’s based on the beggar-thy-neighbor tactics of QE. For a while, nearly a third of European government bonds traded with negative yields. This is outright lunacy in any market, and even more so if one buys into the recovery thesis.
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