According to none other than the very smart people at Goldman Sachs, that is precisely the answer.
As a recap, we sounded the alarm bells last week with a single picture as we flew into Singapore - close to a hundred commercial ships docked off the coast in purest sign very weak trade activity.
Global Trade Volumes Paint Gloom
Trade, as most starry eyed economists will concur, remains one of the most crucial economic activities despite an increasing portion of the globalized economy becoming more service-driven. Global trade volumes aren't looking good at all.
To provide more color on how the global trade scene currently is, we turn to Søren Skou, Chief Executive of Maersk, the world's largest container shipping line. He wasn't all that optimistic as readers should be able to tell. When the head of the largest shipping conglomerate in the world warns of trouble ahead, take heed.
Goldman Says Global Economy In Contraction
When in doubt, ask the Vampire Squid, or so they say. Goldman's economics team has some pretty fancy leading indicators that have proven to be rather accurate in foretelling the trajectories of economic trends. So there is some logic in turning to the world's most profitable investment bank to determine how worried we should actually be when we look at global growth today.
Goldman has something which it calls the Global Leading Indicator (GLI). What exactly is that? From the horse's mouth:
Now that we know what the GLI is, it's time to read into what it has been telling us for quite some time. For the detailed explanation, refer to the GLI "Swirlogram" chart below; the "Swirlogram" is essentially a visual plot of the GLI readings on 2-axis scale - GLI growth & GLI acceleration. But in short, the indicator suggests that the global economy has started to contract, and has been doing so for the last 3 months.
This inference might not be fully reflected in mainstream economic indicators, but if past is prologue, Goldman's economics team is warning that the world is in for a slowdown in growth.
Apart from Goldman's implicit warning - perhaps as goodwill to reward the hand that has fed it so sumptuously since the depths of the financial crisis in 2008, a quick look at how US Macro data has fallen at its fastest pace in 3 years and is at its weakest level since July 2011 even as 42 of 48 data items have missed since the start of February. Please tell us now, how is the world's largest economy and the strongest spluttering engine of marginal growth looking good? It isn't.
Below is the list of US economic data sets that have missed and beat expectations respectively. The miss-beat tally for February stands quite depressingly at 42-6:
Missed expectations (42)
ISM New York
Ward's Domestic Vehicle Sales
Challenger Job Cuts
Initial Jobless Claims
Labor Market Conditions Index
NFIB Small Business Optimism
IBD Economic Optimism
Bloomberg Consumer Comfort
UMich Consumer Sentiment
NAHB Homebuilder Confidence
Chicago Fed NAI
Existing Home Sales
Pending Home Sales
Beat expectations (6)
Markit Services PMI
Case-Shiller Home Price
Q4 GDP Revision (but notably lower)
Markit Manufacturing PMI