That's not the whole story either :Trump inherited a buoyant economy and then gave it a sugar rush of income tax cuts and corporate giveaways. Stellar growth last year prompted the US central bank, the Federal Reserve, to increase interest rates to calm things down.
A combination of those higher borrowing costs, the end of the sugar rush and the tariff war with China, which has increased import costs, has hit US industrial production. Figures last week showed the US manufacturing sector in decline for the first time in a decade.
Significantly, Germany's targeted premier market for these products is now China, not the US.Long recession in Germany
Angela Merkel’s finance minister, Olaf Scholz, has raised expectations of a €50bn (£45bn) boost to the German economy to head off an imminent recession. The economy contracted by a small margin in the second quarter – 0.1% – but is expect to suffer a second and larger drop in the third quarter.
Most analysts expect Scholz’s extra cash will be too little too late to prevent two consecutive quarters of negative growth, which is the technical definition of a recession. A turnaround next year largely depends on a recovery in China, where Germany now sells much of its machine tools, industrial equipment and cars.
The bad news does not end there either.
China was the player that saved the world from plunging into outright economic depression in the wake of the 2008 GFC. Given its own now dicey fiscal state I would not rely on it to pull that rabbit out of the hat this time around. The PRC is currently in a no-win, caught between two fires scenario where apparently whatever it does in the wrong remedy,Chinese debt crisis
China, more than the US, has been the extra gear for the global economy since the 2008 financial crash, but the country is in the throes of a full-blown debt crisis.
State industries have borrowed heavily and so have consumers. Banks are weighed down by loans that will never be repaid. Each time Beijing has attempted to rein in excessive consumer and corporate lending, the global economy has wobbled, forcing China’s policymakers to loosen credit again.
Meanwhile, industrial production growth is at a 30-year low at 4.8%. Beijing wants the economy to become more self-contained with a shift from manufacturing to services, but it’s a long haul.
The global economy is like a house of cards awaiting the first puff of wind to blow it over.
(p.s. as the global canary down the coal mine Singapore is already in recession.)