Jul 24, 2019

The continuing global slowdown

Illustration: Rebecca Zisser/Axios

The first half of the year has been weaker than expected for the global economy, and the main cause is a significant slowdown in manufacturing and trade.

What's happening: The IMF wrote down its global growth expectations for the third time this year, pointing squarely to the U.S.-China trade war that has thrown a wet blanket on cross-border trade and investment, sending manufacturing into a recession in the U.S. and in an increasing number of countries around the globe.

  • "Risks to the forecast are mainly to the downside," IMF economists said in their latest World Economic Outlook, released Tuesday. "They include further trade and technology tensions that dent sentiment and slow investment."
  • Trade volume growth fell to around 0.5% year-over-year in the first quarter, IMF reported, and likely worsened in the second.

Why it matters: Manufacturing is a relatively small portion of the U.S. economy, but it remains a lifeline for much of the rest of the world.

Driving the news: Eurozone manufacturing activity fell to its lowest in more than 11 years this month, according IHS Markit figures released this morning. That number follows a report out of Britain showing manufacturing orders in the second quarter falling to their lowest since 2009.

The big picture: Things are moving clearly and quickly negative. Manufacturing in 2 of the world's 3 largest economies — China and the eurozone — is contracting (at an unprecedented pace in the eurozone), with the U.S. hanging in positive territory by less than half a percent.

  • A global measure of the manufacturing industry from IHS Markit showed its weakest reading in nearly 7 years last month.
  • Emerging markets, responsible for most of the world's growth, also are beginning to slow notably, data from the Institute of International Finance shows, with analysts highlighting in a recent report that "deteriorating manufacturing sentiment is becoming more broad-based globally."

The U.S. is also in the midst of a transportation recession. Freight shipments across all modes of transportation — truck, rail, air and barge — fell 5.3% in June, the seventh month in a row of year-over-year declines, according to the Cass Freight Index for shipments.

Yes, but: Economists remain hopeful that things will turn because the slowdown seems largely the result of political decisions, rather than a fundamental loss of demand.

  • That may not mean much as there's no sign any of the world's economically damaging political decisions are reversing anytime soon.

Go deeper: The world can't afford a trade war right now

Go deeper

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Global: Total confirmed cases as of 4 p.m. ET: 5,463,392 — Total deaths: 344,503 — Total recoveries — 2,195,325Map.
  2. U.S.: Total confirmed cases as of 4 p.m. ET: 1,653,904 — Total deaths: 97,948 — Total recoveries: 366,736 — Total tested: 14,163,915Map.
  3. World: Italy reports lowest number of new cases since February — Ireland reports no new coronavirus deaths on Monday for the first time since March 21 — WHO suspends trial of hydroxychloroquine over safety concerns.
  4. 2020: Trump threatens to move Republican convention from North Carolina — Joe Biden makes first public appearance in two months.
  5. Public health: Officials are urging Americans to wear masks over Memorial Day.
  6. Economy: New York stock exchange to reopen its floor on Tuesday — White House economic adviser Kevin Hassett says it's possible the unemployment rate could still be in double digits by November's election — Charities refocus their efforts to fill gaps left by government.
  7. What should I do? Hydroxychloroquine questions answeredTraveling, asthma, dishes, disinfectants and being contagiousMasks, lending books and self-isolatingExercise, laundry, what counts as soap — Pets, moving and personal healthAnswers about the virus from Axios expertsWhat to know about social distancingHow to minimize your risk.
  8. Other resources: CDC on how to avoid the virus, what to do if you get it, the right mask to wear.

Subscribe to Mike Allen's Axios AM to follow our coronavirus coverage each morning from your inbox.

Updated 2 hours ago - Politics & Policy

Italy reports lowest number of new coronavirus cases since February

Italy’s aerobatic team Frecce Tricolori fly over Milan in Duomo Square on May 25. Photo: Francesco Prandoni/Getty Images

The Italian government reported 300 new cases of coronavirus on Monday, the lowest daily increase since Feb. 29.

Why it matters: Italy, the first country in Europe to implement a nationwide lockdown after emerging as a hotspot in March, appears to have finally weathered its coronavirus outbreak. Italy has reported nearly 33,000 total deaths, the third-highest total behind the U.S. and U.K.

Joe Biden makes first public appearance in over two months

Photo: Oliver Douliery/AFP via Getty Images

Former Vice President Joe Biden made his first in-person appearance in over two months on Monday to honor Memorial Day by laying a wreath at a Delaware veterans park, AP reports.

Why it matters: Biden, the Democratic Party's presumptive nominee, has taken the unprecedented step of campaigning from his home during the coronavirus pandemic, ever since canceling a rally in Cleveland on March 10.