“Economic slowdown” refers to a contraction in the growth rate of an economy. This can be seen in a country’s gross domestic product (GDP). Generally, when an economy goes through a period of economic slowdown, there is an increase in unemployment and bankruptcies, a slowdown in consumer spending, a decline in industrial production, and a decrease in business spending. Corporate profits take a nosedive, and business and consumer sentiment decline. Other factors of the economy, such as the housing market, financial sector, or construction, may also be affected during an economic slowdown.
The Greece crisis is akin to a friend who can't manage their spending and is always in need of cash. The debt-ridden country known for its beaches, olives, and antiquities just doesn't seem to get it. After a bailout program that saw about $265 billion flow into the dried up coffers in Greece back in 2010, the country is really nowhere near surfacing out of its financial crisis. The country was predicted to rebound out of its recession in 2012. This never happened. Greece only recently emerged from its recession, but this is expected to be short-lived; the country will likely falter back into a recession this year. To make matters worse, the country cannot repay its loans. Greece is demanding to revamp the requirements o ... Read More
Regular readers of mine will know that I used to be bullish on China; I thought the Chinese economy offered a good contrarian investment opportunity. Now, I’m turning my sights to the eurozone for the top potential investment opportunity outside the U.S. Here’s why...
Chinese Economy in 2015 Losing SteamYou don't have to be behind the Great Wall of China to realize there are deeper issues brewing in the country of 1.3 billion people. Since assuming the role of the second-largest economy in the world, China’s economy has been caught in a downdraft, with weaker gross domestic product (GDP) growth and broad stalling across the board. There must be something about ... Read More
The NASDAQ may have passed 5,000, but investors shouldn’t get caught up in the excitement. A market correction may just be on the horizon, especially when you consider factors affecting the global economy.
NASDAQ, Stock Markets Near Highs, but Bull Market SlowingAfter the NASDAQ’s recent breach of the psychological 5,000 level, there was talk about a move to another record at above 5,104, last encountered 15 years ago. At that time, in 2000, for the stock market, it was both a period of excessive greed and jubilation. After the recent records by the DOW and S&P 500, I fully expect some pausing in the stock market. We are beginning to see that. Following a strong February, the major stock marke ... Read More
Eurozone Still Messy, but Economic Recovery Has BegunEurope is open for business. Well, kind of. The region—namely the 19-country eurozone—has recently been in the news with the Greece fiasco and its potential exit. Greece now has a four-month reprieve in the form of an extension to its current bailout loans and terms, but the distressed country still has to convince eurozone finance ministers that its revised bailout plan for austerity measures makes sense. For the time being, we are seeing some progress in the eurozone that points to growth. I had been worried about the negative impact from the Russian mess, but so far, it appears to be a non-issue. In the end, Germany, the s ... Read More
One of the more common themes that I keep reading about these days is the strength of U.S. economic growth. It’s important to get at least some understanding of the potential for economic growth, as this will impact your investment strategy. Recent data is definitely making me ask the question: just how strong is the level of economic growth in America? We all know that this holiday season was much weaker than expected for retail companies. Considering that consumer spending fuels the majority of economic growth in America, this is certainly not a positive environment for that sector—but that shouldn’t ... Read More
The U.S. economy has been showing some positive growth that has helped to propel the stock market higher, but be careful: there appears to be some cracks forming in the global economy to which the U.S. economy will not be immune. Japan reported that its economy fell back into a recession after contracting an annualized 1.6% in the third quarter, representing the second straight quarter of contraction. Part of the blame will squarely lie with Prime Minister Abe and his controversial decision to raise the country’s sales tax from five percent to eight percent in April. I consider the decision to raise the sales tax wrong, as it largely impacts the middle cla ... Read More
Remember what happened in the U.S. economy when the financial system was about to collapse? The banks weren’t lending to each other, businesses, or even consumers. The U.S. economy was in a deep economic slowdown. Investment banks like the Lehman Brothers had already collapsed and more would follow. Something had to be done or else it would be a disaster situation. When all of this was happening, the Federal Reserve stepped in to save the U.S. economy. It started to use a monetary policy tool called quantitative easing. The idea was simple: print money out of thin air and then buy back bad debt from the ba ... Read More
By now, you have probably noticed one phenomenon: the speculations regarding China’s growth are increasing each day. Turning on the TV or flipping through the pages of the newspaper, you’ll likely hear and read all about how the second-biggest economic hub in the global economy will tumble. No doubt, the arguments backing this argument are very credible. The Chinese economy is seeing an economic slowdown and troubles in that country continue to gain strength. For example, the Chinese manufacturing sector is stalling. In March, the HSBC Flash China Manufacturing Purchasing Mangers’ Index (PMI) declined to its lowest level in eight months. The output index declined to an ... Read More
Problems in the Canadian economy are growing and whispers of an economic slowdown are looming in the air. If an economic slowdown does occur, the Canadian dollar will be the primary victim—and investors can profit heavily from this scenario. The central bank of the country isn’t very optimistic about the growth. Commenting on the country’s first-quarter growth, the governor of the Bank of Canada, Stephen Poloz, said, “What we have seen is that the numbers in the first quarter have been a little shy of what we were expecting.” He added, “It’s easy to point to the weather as a qualitative explain ... Read More
As the investing adage of the day goes, “When the going gets tough, the tough get eating, smoking, and drinking.” And there’s plenty of tough economic data out there to send people into the arms of their favorite vices and sin stocks. In a nutshell, U.S. unemployment has improved year-over-year to 6.7%, but the improved numbers are the result of an increase in low-wage-paying part-time retail jobs. The underemployment rate remains high near 13%, as does the long-term unemployed at 2.3%. And despite the soaring S&P 500, wages haven’t really budged in y ... Read More