January 1, 2018

IT'S A DEFLATIONARY EPOCH:

Economists Are Saying We Will Have A Happy -- Really Happy -- New Year (Marilyn Geewax, 1/01/18, NPR)

The key reason for such optimism is the growth happening around the world. After a crushing global financial crisis that started in 2008, many parts of the world have taken a long time to bounce back. For example, Europe, which was hit hard by the recession, bounced back in 2017 and is on track to expand at a decent 2.2 percent in 2018, thanks to "falling unemployment, a competitive euro helping exports and a supportive policy backdrop," Behravesh said.

When Europeans are in better financial shape, they buy more U.S. goods and services. And emerging markets are perking up too. Overall, global growth should hit a healthy 3.2 percent in the new year, he predicts.

Besides continued global growth, economists often cite these factors in their upbeat outlooks: tame inflation, low interest rates, low unemployment, tax cuts, pent-up demand for homes, productivity growth and improved consumer confidence.

For Behravesh, this is the bottom line: "Risk of recession remains low."

Are there clouds anywhere in the sky? If one thing gives analysts pause, it's the still-slow growth in wages. Consumers have perked up in attitude, but their income growth has continued to be restrained.

All of the factors driving global growth--free movement of goods and people, technology, adoption of free markets domestically, decline in armed conflicts--are deflationary, so how would wages grow strongly?

Posted by at January 1, 2018 8:14 AM

  

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