Global Tea Leaves Brewing Recession?

USA’s chances 4 avoiding recession hurt by tanking home values & commodity prices overseas? Global housing boom esp. fading as interest rates climb & stronger dollar means weaker Euro & higher export prices. US next?

While US real estate values are mostly holding if not still rising in some regions, it’s quite another story elsewhere. Says the WSJ: “The seasonally adjusted average home price in Canada & New Zealand was down nearly 8% in June … Prices in Sweden in May fell “only” 1.6% … But, the interdependency of economies … to which the USA’s own does not enjoy an exemption … are widely considered a given. And, cautions the newspaper, there are already “signs” of a stalling real estate market in the States as its mortgage interest rates are also rising rapidly & “deals” are falling through at an alarming rate.

As the WSJ also points out, the “bull run in commodity prices is [also] meeting stiff resistance from a surging US dollar. Prices of oil, metals & agricultural products have tumbled since early June after shooting up in the wake of Russia’s invasion of Ukraine. In part, the recent fall reflects investors’ fears that a demand-busting recession is around the corner. (WSJ says, e.g., “Sinking copper prices have preceded every US recession for past 30 yrs.”) But it is also because most commodities are priced in dollars. That means a rallying dollar makes them more expensive for buyers around the world and drags on demand.” In short, what goes around comes around in the global economy, too.

Davd Soul