Is a global recession inevitable?

Deep recession unlikely

The global economy is in a tricky spot. Its two biggest players, the US and China, are engaged in an on again, off again trade war that is slowing growth in both economies, aided by the lingering impact of past policy tightening.

The latest US purchasing managers' index data were arguably the worst in ten years - due to the softness in confidence and new orders - and growth in the eurozone has been sluggish for 18 months. A positive feedback loop is being formed between lower growth and weaker confidence, amplifying both. In July, the US Federal Reserve cut rates for the first time in more than a decade. Since then, the US yield curve has become flatter, with some portions now significantly negative. In addition, high-yield spreads have widened and equities have performed poorly. The markets are emphatically t...