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Illustration: Lazaro Gamio/Axios

As the world economy has slowed, economists are beginning to look for signs of whether it's headed toward recovery or recession.

The big picture: One of the most popular metrics is global trade, which unfortunately is flashing divergent signals.

On one hand: Torsten Slok, chief international economist at Deutsche Bank, argues that global trade is rebounding. The Harpex and Dry Baltic shipping indexes, which track global container and raw materials shipping, both suggest global trade bottomed toward the beginning of the year and started improving.

  • "A pre-condition for being bullish U.S., European, and Asian growth later in 2019 is that we need to see a stabilization in world trade volumes," Slok wrote in a note to clients.
  • "So the question is to what degree the observed move higher in prices is enough to signal a coming stabilization in volumes."

On the other hand: The shipping numbers are contradicted by the worsening picture in manufacturing around the world. As we detailed Friday, Germany's manufacturing numbers have been ugly and the same is true for much of the euro zone.

Globally, it's the same story. In February, IHS Markit released its most recent report on global PMI numbers, titled, "Worldwide manufacturing growth close to stalling as trade flows deteriorate."

  • The tracker fell to a 33-month low, after hitting its lowest in 27 months in January.
  • "The economy is spinning its wheels and not gaining any traction yet in this soft patch produced by trade wars and stock market turbulence and the government shutdown," Chris Rupkey, chief economist at MUFG, told Reuters.

Bloomberg's PMI tracker, which follows every region in the world, shows data have slowly movedtwo levels down from "improving" for much of 2018 to "neutral" at the start of 2019.

  • The PMI slump is "alarming in Japan, Korea and Taiwan," and "appears to reflect a disruption in global trade that may relate to US tariff policy," Greg Gibbs, analyst at Amplifying Global FX Capital, said, according to FXStreet.
  • U.S. PMI fell to its lowest in 18 months. Manufacturing output fell for the second consecutive month in February, the first back-to-back decline since 2017.
  • China, the No. 1 trading partner with most of the world, saw its PMI fall into contraction in February and record the weakest reading since February 2016.

Go deeper: The global economy's road to "Japanization"

Go deeper

In photos: Protests outside fortified capitols draw only small groups

Armed members of the far-right extremist group the Boogaloo Bois near the Michigan Capitol Building in Lansing on Jan. 17. About 20 protesters showed up, AP notes. Photo: Seth Herald/AFP via Getty Images

Small groups of protesters gathered outside fortified statehouses across the U.S. over the weekend ahead of President-elect Joe Biden's inauguration Wednesday.

The big picture: Some protests attracted armed members of far-right extremist groups but there were no reports of clashes, as had been feared. The National Guard and law enforcement outnumbered demonstrators, as security was heightened around the U.S. to avoid a repeat of the Jan. 6 U.S. Capitol riots, per AP.

Felix Salmon, author of Capital
7 hours ago - World

China's economy grows 6.5% in Q4 as country rebounds from coronavirus

A technician installs and checks service robots to be be used for food and medicine delivery in Jiaxing, Zhejiang Province, China, on Sunday. Photo: Hu Xuejun/VCG via Getty Images

China's economy grew at a 6.5% pace in the final quarter of 2020, the national statistics bureau announced Monday local time, topping off a year in which it grew in three of four quarters and by 2.3% in total.

Why it matters: No other major economy managed positive growth in 2020. Although the COVID-19 pandemic was first detected in China, the country got the virus under control and became one of the main positive drivers of the global economy even as the rest of the world was largely under lockdown.

8 hours ago - Politics & Policy

Trump to issue at least 100 pardons and commutations before leaving office

Photo: Mandel Ngan/AFP via Getty Images

President Trump plans to issue at least 100 pardons and commutations on his final full day in office Tuesday, sources familiar with the matter told Axios.

Why it matters: This is a continuation of the president's controversial December spree that saw full pardons granted to more than two dozen people — including former Trump campaign chair Paul Manafort, longtime associate Roger Stone and Charles Kushner, the father of Trump's senior adviser and son-in-law, Jared Kushner.

  • The pardons set to be issued before Trump exits the White House will be a mix of criminal justice ones and pardons for people connected to the president, the sources said.
  • CNN first reported this news.

Go deeper: Convicts turn to D.C. fixers for Trump pardons