A few of us have never bought the idea that the world economy has recovered from the financial crisis—mainly because people were struggling to make ends meet before the crisis. Add to that a mind-boggling obsession to impose austerity on the very people are struggling and, presto, you have the perfect storm for a mess. And just in the past 24 hours we get a flavor of this.
From The Wall Street Journal (behind the paywall):
But investors got reminders Thursday of fragility in the global economy. In the U.S., new jobless figures disappointed. A report on manufacturing in China showed the biggest drop in nine months for the world’s second-largest economy. In Europe, a widely watched survey suggested that business activity across the continent continued a recent contraction in August.
Germany—Europe’s usual engine of growth—faced its biggest decline in new orders in three years, according to data provider Markit.
And over in China, stuff is just piling up because people are not buying, per The New York Times:
After three decades of torrid growth, China is encountering an unfamiliar problem with its newly struggling economy: a huge buildup of unsold goods that is cluttering shop floors, clogging car dealerships and filling factory warehouses.
The glut of everything from steel and household appliances to cars and apartments is hampering China’s efforts to emerge from a sharp economic slowdown. It has also produced a series of price wars and has led manufacturers to redouble efforts to export what they cannot sell at home.
The severity of China’s inventory overhang has been carefully masked by the blocking or adjusting of economic data by the Chinese government — all part of an effort to prop up confidence in the economy among business managers and investors.
Count me as not surprised.