Summer shrinkages

The better than expected data for US economic growth (2.1 pct in Q2, instead of the 1.8 pct expected) did nothing to prevent the US central bank from lowering rates (by 0.25 percentage points). The chair of the Federal Reserve tried to calm fears by insisting that this reduction did not have to be the beginning of a series, but his words had the opposite impact. The US economy is still in excellent shape, as reflected by the lowest unemployment figures for 50 years; but on the other hand, the nation’s executive power lies with Donald Trump, who wanted a full percentage point reduction in the hope that low interest rates would boost the economy and his re-election chances. The uncertainty surrounding the US-China trade war, meanwhile, is continuing to cause ripples across the global economy. The backdrop to the recent ‘peace talks’ in Shanghai was the latest data on the depreciating value of the trade between the two countries and China’s sluggish economic growth