The Macro Report | September 2019
Trump, Johnson cloud outlook
Global growth continues to cool under the weight of the ongoing trade dispute between the United States and China. Our central scenario is for growth to muddle along with risks pointed to the downside. Worries about a potential recession in the United States have increased in recent weeks because of the trade rift, weaker growth in Asia and Europe, and movements in the Treasury bond market. We believe the probability of a recession is a little below one-third. While manufacturing activity is slowing, the U.S. economy is continuing to add jobs, but at a more modest pace.
President Trump’s tariffs on Chinese exports are also beginning to seriously impact the overall Chinese economy, the world’s second largest. As a result, we are now more worried about the resilience of international financial markets and capital flows should China’s downturn worsen. Elsewhere, political turmoil and shifting policies in the United Kingdom, Italy, and Argentina are having a knock-on effect on financial markets. In particular, Boris Johnson, the pro-Brexit campaigner who became Britain’s new prime minister in July, has faced a chaotic first few weeks in office.
Is the U.S. headed for recession?
The economy is showing signs of weakness amid the ongoing trade dispute and a slowdown in globally integrated manufacturing activity.
China slowdown raises risks
The government is struggling to revive a cooling economy in the midst of a protracted trade battle with the United States, raising the risks to global financial markets.
About the macro report
The Macro Report is written by members of Putnam’s Fixed Income team. With backgrounds in applied economics, currency and interest-rate analysis, and sovereign and local bond market dynamics, this group conducts macroeconomic research in support of Putnam’s global fixed-income strategies.
Michael Atkin, Head of Macro & Sovereign Credit
Investing since 1988
Sovereign debt, global growth analysis
Albert Chan, CFA, Head of Portfolio Construction
Interest-rate derivatives, government debt, risk analysis
Onsel Emre, PhD, Analyst
Inflation, risk analysis, global growth dynamics
Sterling Horne, Analyst
Politics and economics
Irina Solyanik, CFA, Analyst
Quantitive analysis, growth forecasting
Izzet Yildiz, PhD, Analyst
Labor market analysis, global growth dynamics