If the United States had China’s growth numbers, the world would be in the biggest boom that it has seen in a lifetime. The problem is that China is not anywhere close to the United States, and it just takes a whole lot more growth from China to equate to much global growth. Today’s economic data from China was bad enough that it almost signals no other option than economic stimulus in the form of easing and other measures.
Inflation, measured by the consumer price index, was only 1.8% and was lower for the fourth straight month.
China’s industrial output fell to growth of 9.2% in July, but that is south of 9.5% in June and it marks a low not seen since way back in the recession in May of 2009. Reuters was looking for a reading of 9.8%. Should we say that they were “hoping” for 9.8%?
China’s problem is not just an internal measure. It is still heavily dependent on global growth. With the rest of the BRIC nations and emerging markets showing lower growth, it seems odd that the expectation would have been for an improvement yet. Europe is in recession and U.S. growth is considered anemic by almost all market observers.
Maybe more rate cuts are coming down the pipe from China. Bad news has to be bad enough that it will drive stimulus. That is the prevailing mentality.
JON C. OGG
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