Wednesday, June 10, 2015

Andrew Smithers: "Interest rates, secular stagnation and secular decline"

From Mr. Smithers' blog at the Financial Times:

World growth over the past three years has fallen below its five-year rate and below its very long-term one, as chart one shows. It seems therefore reasonable to assume that we are experiencing what is at least a cyclical downturn. But the chart also shows that the trend since 1980 or 1990 seems to be a rising rather than a falling one. It doesn’t therefore seem to me reasonable to assume that the world is about to experience of the sort of longer -term slowdown that can reasonably be described as secular stagnation, though of course this may happen.
It is, however, sadly likely that the developed world is experiencing a secular decline in its growth as shown in chart two. The falling trend is common to all G5 countries and is driven by both demography and poor productivity....MUCH MORE