Stalling or escaping?
As I reported in a recent post, global economic growth has been slowing from its already below-average level. US economic growth has dropped away in the first half of 2016, along with weak growth in Japan and Europe, slowing growth in China, impending recession in post-Brexit vote Britain and continued recessions in Brazil and Russia, with South Africa and Turkey about to join them. Indeed, the US is growing at its weakest rate since 2010. Worse, everything unrelated to consumer spending is suffering an outright contraction for the first time since the recession ended in 2009, according to Deutsche Bank.
US business investment is dying. Expenditures on new equipment fell 3.5% in the second quarter and is down nearly 2% over the last year. Spending on structures was down 7.9% in the quarter and 7% over the past year. Labour productivity is stalling. Even home purchases are falling, with residential investment down 6.1% in Q2 2016.