{"id":2464,"date":"2007-11-12T12:30:46","date_gmt":"2007-11-12T12:30:46","guid":{"rendered":"https:\/\/mmm.9dotdigital.ca\/?p=2464"},"modified":"2025-03-27T15:48:30","modified_gmt":"2025-03-27T15:48:30","slug":"g7-downswing-one-year-old-at-critical-stage","status":"publish","type":"post","link":"https:\/\/mmm.9dotdigital.ca\/?p=2464","title":{"rendered":"G7 downswing one year old; at critical stage"},"content":{"rendered":"<p>In forecast presentations late last year I suggested G7 industrial activity was entering a downswing phase. To get an idea of how the slowdown might play out, I examined 10 G7 downswings over the last 40 years, separating them into five &ldquo;soft&rdquo; and five &ldquo;hard&rdquo; landings &ndash; the latter associated with US recessions. I then averaged performance across these two groups to construct &ldquo;soft&rdquo; and &ldquo;hard&rdquo; landing scenarios for annual G7 industrial output growth in the current cycle. <\/p>\n<p>A key conclusion of the analysis was that &ldquo;soft&rdquo; and &ldquo;hard&rdquo; landings look similar for the first 12-15 months after a cyclical peak. The averages showed annual output growth slowing steadily to about zero in both cases. It is only after 15-18 months that the two diverge significantly: activity starts to regain momentum in &ldquo;soft&rdquo; landings but shifts from stagnation to contraction in &ldquo;hard&rdquo; landings \/ US recessions. <\/p>\n<p>The chart below is an update of one used last year, superimposing the &ldquo;soft&rdquo; and &ldquo;hard&rdquo; landing scenarios on the current cycle. Annual industrial output growth peaked at 4.5% in September 2006 and fell to 1.7% by June 2007 before recovering to 2.3% in September, the latest reading. The recent minor improvement will be cut short by the &ldquo;credit crunch&rdquo; and a renewed decline to 1% or below is likely by early 2008.<\/p>\n<p>As the chart shows, the current downswing is about to reach the critical stage dividing historical &ldquo;soft&rdquo; and &ldquo;hard&rdquo; landings. Soaring energy costs and escalating credit market losses are clearly unhelpful but I still think the odds favour a &quot;soft&quot; landing like 1995 or 1998 rather than a 2001-style recession. <\/p>\n<p><span class=\"full-image-float-none\"><img decoding=\"async\" style=\"width: 500px; height: 300px\" alt=\"G7IndustrialOutput.jpg\" src=\"\/storage\/G7IndustrialOutput.jpg\" \/><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In forecast presentations late last year I suggested G7 industrial activity was entering a downswing phase. To get an idea of how the slowdown might play out, I examined 10 G7 downswings over the last 40 years, separating them into five &ldquo;soft&rdquo; and five &ldquo;hard&rdquo; landings &ndash; the latter associated with US recessions. I then [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-2464","post","type-post","status-publish","format-standard","hentry","category-money-moves-markets"],"_links":{"self":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2464","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2464"}],"version-history":[{"count":1,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2464\/revisions"}],"predecessor-version":[{"id":4773,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2464\/revisions\/4773"}],"wp:attachment":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2464"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2464"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2464"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}