By Alex Plough October 17, 2014
(©kcp4911)
Gloomy Signals for Global Market
After a long period of calm in the financial markets, an unnerving drop in a range of global indicators this week rattled confidence in a sustained economic recovery.
On Wednesday the Standard & Poor’s 500 stock market index briefly fell into negative territory for the year, a shock that alerted commentators to the possibility of a global slowdown that could weigh down the relatively strong US economy.
New York Times reporter Neil Irwin, who is senior economic correspondent for the paper’s Upshot column, highlighted a series of worrying trends playing out across the world.
For example, the yields on 10-year US Treasury Bonds have fallen since the start of the year, indicating that demand for safe assets is on the rise and investors are nervous about the future. Inflation expectations, as measured by the difference between prices on regular bonds and those indexed to inflation, have also fallen precipitously in the last new months. Standard economy theory tells us that an improving economy should cause price inflation, so the weakness in inflation expectations despite solid gains in the US job market has left economists scratching their heads.
Crude Oil Prices Plunge
Another set of closely watched economic indicators are commodity prices, many of which have fallen since the summer.
Economic growth has a strong impact in oil consumption in the US and changes in expectations also affect prices – which tend to rise when the outlook is good. On Tuesday the cost of a barrel of crude oil experienced the biggest one-day drop in nearly two years, after a glut in production from the US hydraulic fracturing industry combined with weak global demand to push down prices.
While this is bad news for countries largely reliant on energy exports, such as Russia and Saudi Arabia, US consumers and businesses (apart from the oil companies) will benefit as their petrol bills fall dramatically. The knock-on effect of falling energy costs could generate as much as $1.1 trillion each year for global economies according to Citigroup’s Ed Morse, the bank’s head of global commodities research in New York.
Data Mapping the US and Global Economies
Anyone interested in exactly how different parts of US economy have faired since the Great Recession should check out this ridiculously comprehensive piece by The New York Times‘ Upshot titled ‘How the Recession Reshaped the Economy, in 255 Charts’. As you scroll over a tangle of green, red and orange threads, individual interactive graphs pop open to reveal jobs and average salary numbers for hundreds of sectors, such as software publishers, home healthcare services or florists.
Another interesting map doing the rounds compares the Gross Domestic Product (GDP) of each US state with those of individual countries. US think tank the American Enterprise Institute created the map to add some global context to the enormous US economy, which in 2012 produced 22.3% of world GDP despite hosting just 4.4% of the world’s population.
Nuclear Fusion Power Breakthrough
(Nuclear fusion display at Weiss Energy Hall, Houston Museum of Natural Science.
©Katherine Fellows)
This week the aerospace and defense giant Lockheed Martin Corp announced a technological breakthrough in developing a power source based on nuclear fusion. The company claims that it’s first generation of fusion reactors are small enough to fit on the back of a truck and could be ready for use in a decade.
While some scientists expressed skepticism over the news, if the technology is economically viable it would quickly replace existing nuclear power plants, which relay on nuclear fission to generate electricity. The technology could also make it possible for planes and ships to travel indefinitely without the need to refuel.
The Rise of Drake, the New King of Rap
Bloomberg Businessweek’s recent profile of hip hop artist Drake revealed that the 27-year-old Canadian has had a hit single in the Billboard Hot 100 chart 73 times, surpassing the record set by the Beatles, who did it 72 times.
Businessweek journalist Devin Leonard tried to dissect the unlikely success of the young rapper, who has an estimated net worth of $33 million according to Forbes magazine. “He’s a B-grade rapper and a C-grade singer at best,” said Leonard, “but he’s the first rap star to combine these two talents in a way that doesn’t turn off the hard-core hip-hop fans”.
The Great Rip-Off
Finally, journalists working on investigations into anonymous shell companies, often used by criminal networks, got a helping hand this week from a new project by the anti-corruption NGO Global Witness. Their latest project, ‘The Great Rip-Off: anonymous companies and their victims’ uses press reports and asset recovery databases to map the use of anonymous companies by criminals around the world.
