Global Growth Is Out of Sync: Now What?

By Lauren Goodwin, CFA, via

In six weeks, the S&P 500 returned all investors’ gains in 2018. These market losses have prompted investors to reminisce on the previous 18 months of “goldilocks” conditions for financial markets. During this time, accommodative monetary policy and broad-based global economic growth supported asset prices at low levels of volatility.

Now, third-quarter economic data suggests that global growth is de-synchronizing. For instance, in the U.S. real GDP estimates for the third quarter posted at 0.9% quarter-on-quarter (3.6% annualized), supported by robust consumer spending. At the same time, GDP growth in Germany and Japan declined on a quarter-on-quarter basis.

There are plenty of caveats softening these figures. For example, both countries were impacted by one-off hits to growth that could rebound in future quarters. In addition, year-on-year figures still point to meaningful growth in both countries. Still, growth rates are certainly beginning to slow. This slowdown was notable even before recent data, particularly in Europe where business and manufacturing confidence have softened throughout the year.

GDP growth remains positive…

Real GDP growth, percent year-on-year change


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