Sometimes economic trends take years to emerge and evolve only very slowly. Others develop more rapidly and cause us to reassess our view of the world at short notice. The potential decoupling (or de-risking) of US-China supply chains might fall into the latter camp. Given that the US economy is already operating at close to full employment, it does not seem feasible to suggest that it will onshore the production of all strategically important goods that are currently made in China. Rather, we are likely to see the onshoring of some manufacturing, coupled with the ‘friendshoring’ of the production of

Fathom Consulting’s latest Global Economic and Markets Outlook (GEMO) central scenario envisages a continued pause in global trade growth, resulting from the ongoing uncertainty around the US and China’s trading relationship. Though this will — and has — been a drag on GDP, we see investors’ fears of a global recession as overblown. Our estimates point to a sharp reversal in trade growth, from 2% above trend in the middle of last year to 2% below trend now. While this fall is significant, it pales in comparison to the Global Financial Crisis, which was the deepest global recession in decades.

The ebbs and flows of President Trump’s protectionist rhetoric have had a material impact on global trade, as measured by CPB — the Netherlands Bureau for Policy Analysis. The volume of trade, which had been rising steadily if slowly since the global financial crisis, stalled last year. Our judgement is that this has been a consequence of uncertainty — of fear rather than fact. It would take a substantial escalation from here, involving the imposition of sizeable, trilateral tariffs between the US, China and the EU, to tip most major economies into recession. Refresh the chart in your browser | Edit chart

Fathom’s euro area nowcast model uses numerous high-frequency data to construct a timely estimate of euro area GDP growth. According to the model, the euro area economy is likely to have expanded by 0.4% in the third quarter. The currency bloc’s growth rate has undoubtedly slowed in the face of an uncertain global trade environment (net trade has been a drag on growth this year). Nevertheless, the pace of expansion remains solid and this, coupled with rising core inflation, should give the ECB sufficient confidence to cease net asset purchases in December. Refresh the chart in your browser | Edit chart in

The decision by the Trump administration to put tariffs on imports from China has sent share prices tumbling across the world, as fears over a trade war have risen. A global trade war would have serious, negative consequences for the global economy, but this remains an outside risk in our opinion. It remains to be seen how China will react to the US President’s move, but there are several reasons that we do not anticipate a sharp decline in global trade in response to the announced tariffs. Refresh the chart in your browser | Edit chart in Datastream First, China’s response has

Ten years ago last Wednesday marked the start for many observers of the global financial crisis – a series of rolling credit shocks and bank crashes that led to the deepest world recession for a generation and a decade of slow growth and painful repair. On Aug. 9, 2007, the European Central Bank flooded its money markets with billions of euros of emergency cash to prevent a seizure in the European banking system after France’s BNP Paribas became the latest to shut down investment funds hobbled by a collapse of U.S. mortgage and asset-backed bond markets. Serial bank collapses in

It is now almost 200 years since the British economist David Ricardo first wrote at length about the virtues of international trade. His Theory of Comparative Advantage explains why it is advantageous for a country to focus on making whatever goods or services it is best placed to make, and then to exchange those goods or services with other countries whose productive skills lie elsewhere. It has become a fundamental tenet of economics that more trade is good, and less trade is bad. This week’s chart of the week shows how global trade has evolved over the past 50 years

Global trade plummeted in the financial crisis.  It then recovered but has now stalled.    Is it stalling due to growing isolationism and is the UK’s Brexit vote part of this shift? Watch the video to find out Fathom Consulting’s view.