The global economy — which had long remained resilient despite U.S. weakness — is now slowing significantly, with Europe offering the latest evidence of trouble.
On Thursday, the European Union’s statistics agency said gross domestic product in the euro zone contracted 0.2% in the second quarter, the equivalent of a 0.8% annual rate of decline. It marked the first time since the early 1990s that GDP has fallen overall in the 15 countries that use the euro.
– From “World Economy Shows New Strain” (subscription required), The Wall Street Journal, Friday August 15, A1
A front page article in today’s Wall Street Journal explains what’s going on in the stock market these days: “World Economy Shows New Strain: European Output Shrinks, US Inflation Jumps; Fresh Worries In Developing Nations” (subscription required), The Wall Street Journal, Friday August 15, A1. If anybody wants to read the article, e-mail me and I’ll send you a link.
Like I wrote last Friday, investors are starting to reckon with the second order effects of the US bust as the rest of the world slows and we enter a global recession.