Economists Chase Tails And Tales, Cut GDP Estimates Again

Tail Chase

In the wake of recent economic data, economists at the IMF and Deutsche Bank lowered their growth estimates. 

IMF Cuts Forecast Again 

Like a dog running in futile circles hoping to catch its tail, the IMF does the same thing with its perennially over-optimistic assessment of everything from emerging markets to the G7 economies.

Reuters reports the IMF cuts global growth forecasts again, citing commodity and China worries. 

 The International Monetary Fund cut its global growth forecasts for a second time this year on Tuesday, citing weak commodity prices and a slowdown in China and warned that policies aimed at increasing demand were needed.

The Fund, whose annual meeting starts in Peru this week, forecast that the world economy would grow at 3.1 percent this year and by 3.6 percent in 2016.

Both new forecasts are 0.2 percentage point below its July forecast and are 0.4 percentage point and 0.2 percentage point below its April outlook, respectively.

The downgrades come after central in major industrial economies have cut rates to near zero and spent around $7 trillion in quantitative easing programs in the seven years since the global financial crisis. Despite these measures, investment, growth and productivity are stuck below pre-crisis levels and there is a lack of consumer demand.

Among major economies, the United States is expected to grow by 2.6 percent in 2015 and by 2.8 percent in 2016, the Eurozone is forecast to grow by 1.5 percent and 1.6 percent, respectively, with Japan seen at 0.6 percent and 1.0 percent.

Deutsche's “Weatherman” Cuts Growth Outlook

Citing today's trade deficit report (see Trade Deficit Widens to $48.3 Billion, Up From $41.8 Billion; iPhone Connection), Deutsche Bank's chief US economist Joseph LaVorgna joins the IMF in a tail-chasing exercise. 

ZeroHedge reports LaVorgna Throws In The Towel On US Economy As Deutsche's “Weatherman” Cuts Growth Outlook. 

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