The consensus estimates from Wall Street is that the United States’ economy should still expand through 2019, albeit at a slower pace compared to 2018. Despite the high amount of press given towards domestic enmity and internal challenges, there’s an under reported truism: if the rest of the world goes into recession, the US will inevitably follow. We’ve spoken at length about the conflict between the US and China – the two largest economies in the world, but we’ve been ignoring one of the world’s largest trading blocs: the European Union.
To be specific Italy officially hit a recession with data posted in January 2019. Remember: recession is defined as 2 consecutive quarters of negative-growth, so this represents at least 6 months of a slowdown in a major European economy. Moreover, the largest economy in Europe – that’s Germany – is projected to hit a mild recession due to a manufacturing slowdown. The yellow-vest protests in France started in November but still ongoing, over regressive-taxes and decreased standards of living have also reduced commerce. Meanwhile, conflict between the United Kingdom’s exit from the European Union threaten to stifle trade & travel over the next few months, creating additional pressures to the continent.
Of course, there are positive catalysts in the Eurozone, but savvy policy makers and negotiation will be required for the region to thrive at its full potential again.