The world economy is starting to look a lot like the Titanic, HSBC chief economist warns

May 14, 2015 at 18:00 (Uncategorized)

Financial Post

Like the ill-fated White Star liner, the global economy is sailing across the ocean with too few lifeboats and an iceberg looming on the horizon, warns HSBC chief economist Stephen King.

And that’s going to be a titanic problem for global policy makers.

It’s been six years since the last U.S. recession and though they don’t come like clockwork, King says we are closer to the next one than the last one.

But unlike past downturns, the weak recovery from the last recession has not allowed monetary policymakers to replenish their arsenals.

The chart below shows the average annual U.S. growth rates during the six years after a recession over the past 40 years. The latest recovery is particularly weak, King notes.

chart2

Budget deficits are still huge, debt levels too high and while the U.S. economy has improved it’s far from top form.

In every recession since the 1970s, the…

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