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Is a growth slowdown a serious worry?

| Posted by: Paul Donovan | Tags: Paul Donovan Weekly

Is the world economy slowing down? Not seriously. Some economic numbers have been a bit lower than forecast. That is quite common at this time of year. Seasonal adjustment is never very good at dealing with weather changes. It also does not deal with the date of Easter changing very well. Data is "noisy" as a result.
The US labor market is a good example of the problem. The headlines were weaker, the details were stronger. Bad weather weakened some parts of the economy. Construction and hotels had weak jobs numbers. However, the share of people who lost jobs (rather than quit their job) is at a 17-year low. That is a strong economic signal.
Business sentiment data in Europe has also weakened. This is not a great predictor of growth (survey data is not too reliable). Since 2010, falling German manufacturing sentiment is just as likely to mean rising output as falling output in the real world.
Things like "surprise indices" reporting weak headline data miss out on stronger details. US fiscal stimulus has yet to hit the economy properly. Labor markets in Europe and the US are strong, incomes are fine. There is no need to panic about growth.