As global slump looms, millions still struggle

LONDON — Only a few months ago, the world’s fortunes appeared increasingly robust. For the first time since the wealth-destroying agony of the global financial crisis, every major economy was growing in unison.

So much for all that.

The global economy is now palpably weakening, even as most countries are still grappling with the damage from that last downturn. Many nations are mired in stagnation or sliding that way. Oil prices are falling, and factory orders are diminishing, reflecting slackening demand for goods. Companies are warning of disappointing profits, sending stock markets into a frenetic bout of selling that reinforces the slowdown.

Germany and Japan have both contracted in recent months. China is slowing more than experts anticipated. Even the United States, the world’s largest economy, and oft-trumpeted standout performer, is expected to decelerate next year as the stimulative effects of President Donald Trump’s $1.5 trillion tax cut wear off, leaving huge public debts.

The reasons for this turn run from rising interest rates delivered by the Federal Reserve and other central banks to the unfolding trade war unleashed by the Trump administration. The likelihood that Britain’s tortuous exit from the European Union will damage trade across the English Channel has discouraged investment.

None of this amounts to a screaming emergency, or even a pronounced drop in commercial activity. The Organization for Economic Cooperation and Development — a think tank run by the world’s most advanced nations — recently concluded that the global economy would expand by 3.5 percent next year, down from 3.7 percent this year.

Yet in declaring that “the global expansion has peaked,” the brains at the OECD effectively concluded that the current situation is of Economics. “There was as good as it gets before the already wage stagnation and next pause or downturn. If productivity stagnation. The this is indeed the high-watrade war has exacerbated ter mark of global prosper- all of that.” ity, that is likely to come as The biggest risk to global a shock to the tens of milgrowth appears to be that lions of people who have yet the trade war is, at least in to recover from the devastapart, working as designed. tion of the Great Recession. Trump has excoriated

Though the slowdown China as a mortal threat to appears mild, it also holds American livelihoods, accus- the potential to intensify the ing Beijing of subsidizing widespread sense of grievexports and stealing intellec- ance roiling many societies, tual property. He has affixed contributing to the embrace tariffs on some $250 billion in of populists with autocratic Chinese exports in an effort impulses. In an age of lamen- to pressure Beijing to change tation over economic injusits ways. tice, and with political moveThis has produced lit- ments on the march decrying tle change in China’s ecoimmigrants as threats, weaker nomic practices. It has actu- growth is likely to spur more ally increased the U.S. trade conflict. Slower growth is deficit with China, contrary not going to make anyone to Trump’s stated aim. feel more secure about the But it has thrown sand in prospect of robots replacing the gears of China’s industrial human hands, or jobs shiftjuggernaut. As of September, ing to lower-wage lands. China’s rail freight usage,

“It’s just going to exacer- bank lending and electrical bate the tensions that have consumption had increased led to the socioeconomic and about 9 percent compared political problems we have with the previous year, down seen in the United States from a pace of more than 11 and parts of Europe,” said percent in January. Thomas A. Bernes, an econChina’s growth was already omist at the Center for Inter- slowing as its leaders seek national Governance Inno- to transition from an econvation, a Canadian research omy powered by prodigious institution. “Inequality is exports, in enterprises that going to become even more have spewed pollution, pronounced.” toward a cleaner future pro

In Greece, Spain and Italy, pelled by domestic consump- the youth unemployment tion. rate is stuck above 30 perBut the U.S. tariffs have cent. In Britain, the typical prompted multinational com- worker has not seen a pay panies to shift orders from raise in more than a decade, after accounting for inflation. South Africa’s economy is smaller today than it was in 2010, and now the country is ensnared in recession.

In the United States, the unemployment rate has plunged to 3.7 perc e nt, its lowest level since 1969. Yet so many people have given up looking for work that less than two-thirds of the working-age population was employed as of October, according to the Labor Department. That was a lower share than before the 2008 financial crisis.

“We see a lost generation,” said Swati Dhingra, an economist at the London School Chinese factories to plants ter feed reveals that share in other lands, from Vietnam prices are one of the data to Mexico. Uncertainty over points he cares about deeply. the future has postponed As the markets recoil, the some business. Trump administration has

“There’s now potential for flashed signals that it may bad news on the trade front be prepared to entertain a to trigger shifts in equity cease-fire with China to limit markets and a pullback on economic damage. investment,” said Steven J. But the conflict goes far Davis, an international busi- beyond trade, with hawks ness expert at the University inside the Trump admin- of Chicago Booth School of istration seeking to inflict Business. harm on China to impede

Given that China is the its continued ascent as a world’s second largest econglobal superpower. If that omy, the consequences of its is the mission, Trump may slowing ripple out widely, be willing to absorb eco- helping explain a pronounced nomic costs as the price of drop in factory orders in Gercontainment. many. American farmers have That take appears con- suffered lost sales as China sistent with Trump’s grow- has responded to tariffs by ing fixation on the Federal slapping duties on imports Reserve, which the president from the United States, not just branded “a much bigger least on soybeans. Stock problem than China,” in an markets and oil prices have interview with The Wash- plunged in part on fears that ington Post.

China will buy fewer goods. In lifting interest rates, the

Much of the dip in U.S. U.S. central bank has been share prices reflects the acting under the accepted increasingly embattled state wisdom that too much easy of major technology compa- money sloshing around for nies like Facebook, which has too long tends to produce drawn public ire for failing trouble, from higher prices to prevent its platform from to financial mischief. Yet the serving as a primary conduit effect of raising rates is to for hate speech and misinformation. But technology shares have also plunged because many companies,

Apple among them, now depend on China for enormous volumes of sales — sales now at risk in the face of the trade war.

A glance at Trump’s Twit-

QILAI SHEN / BLOOMBERG Containers sit stacked next to gantry cranes as trucks operate at the Port of Ningbo-Zhoushan in Ningbo, China. Economies around the world have contracted during recent months and China is slowing more than experts had anticipated.

SAMUEL ARANDA/THE NEW YORK TIMES 2017 Tourists relax at a bar in downtown Barcelona. Less than a year ago, every major economy was expanding at once. Now, a slowdown holds the potential to intensify the sense of grievance roiling many societies.