Global economic recovery has to start sometime. Now seems like as good a time as any.
The signs, however, are scrambled.
On July 2, the US Bureau of Labor Statistics reported disappointing data for June. Nonfarm payroll employment fell by 467,000 jobs, and the unemployment rate loitered at a gruesome 9.5%.
The number of unemployed Americans is now 14.7 million—up 7.2 million since the start of the recession in December 2007.
The International Monetary Fund, however, sees hope, asserting on July 8 that, “The world economy is stabilizing, helped by unprecedented macroeconomic and financial policy support.”
A contemporaneous case in point is GM. With the help of a $50 billion commitment from US taxpayers, the once mighty automaker was poised, as the IMF updated its World Economic Outlook, to emerge from bankruptcy. The turnaround came sooner than had been expected.
But the company’s sharply diminished corpus now bears marks—some say scars—of that “policy support” IMF mentioned. GM will be 60.8% owned by the US government, 11.7% by the Canadian government, and 17.5% by the United Auto Workers.
According to news reports, it might change the color of its logo from blue to green.
On the broader economy, IMF doesn’t gush optimism.
“The recession is not over, and the recovery is likely to be sluggish,” it said.
In first-quarter 2009, the global economy contracted by almost as much as in fourth-quarter 2008.
The IMF now expects global economic activity to contract by 1.4% in 2009 and to expand by 2.5% in 2010. The 2010 forecast exceeds the outlook IMF made in April by a not-so-whopping 0.6 percentage point.
“The downward drag exerted by the financial shock, the sharp fall of global trade, and the general increase in uncertainty and collapse of confidence is gradually diminishing,” the IMF said. “However, supportive forces are still weak.”
Among those are housing markets yet to bottom out, financial markets still impaired, and bank balance sheets that “still need to be cleaned.”
To that list might be added questions about GM’s ability to sell cars designed by politicians and labor bosses.
(Online July 10, 2009; author’s e-mail: [email protected])