Well, those predictions have proven correct, and the U.S. economy has now entered a “technical recession” (defined strictly as when an economy's domestic output contracts for two consecutive quarters). Not yet. The consensus is now back to optimism. There will be no recession in 2023, and the situation can only improve in 2024.

Consider the ultra-optimistic view of Goldman Sachs, a major U.S. investment bank and chief strategist for U.S. capital. The association's economists said, “The global economy outperformed our optimistic expectations in 2023, with GDP growth on track to outperform consensus expectations a year ago,'' and “recession risks remain limited.'' “We believe that this is the case,” the report said. The bank's team estimates that global output will rise by 2.7% this year and 2.4% next year, with unemployment remaining low and inflation falling rapidly. In other words, the US Federal Reserve's interest rate hike policy, at least in the US, has lowered inflation without causing a decline in output and employment.

This is called the “Goldilocks” outcome. In other words, the economy is not so “hot” that inflation remains high, nor is it “so cold” that production contracts and unemployment rises. And this is happening despite the war between Ukraine and Russia, and now the nightmare between Israel and Gaza. perfection!

But hold the horse. Indeed, inflation rates in most advanced capitalist economies fell last year from a peak of around 8-10% a year to 3-5%. While this is some solace for struggling households, it still means prices such as travel to the store, housing and utilities are rising. In fact, since the inflation spiral began, the cost of living has increased by 15 to 20 percent for the average household in most countries, and even more for poorer households that spend the majority of their income on food and energy. Prices will not return to pre-2020 pandemic recession levels. They're just slowly rising.

When it comes to unemployment rates, it is true that official statistics for most countries show that unemployment rates are at or near historic lows. why is that? It's not just because the labor market is strong. Rather, it means that the supply of available labor has stopped increasing since the pandemic. Many near-retirement workers have not returned to work, and a significant number are still suffering from long-term COVID-19 infections (with a surge in disability benefit claims).

But there are signs that low unemployment rates in the U.S. and elsewhere may not last. In many major economies, many jobs created last year were part-time. In fact, full-time employment has been declining in the United States since April. And job creation growth is declining rapidly every month. Additionally, work hours in U.S. industry are decreasing. Even if wage rates rise more than the fall in inflation, if workers work fewer hours, their weekly earnings will not increase significantly or at all. In the US, real weekly earnings did not increase in 2023. And if we look at the most productive sectors of major countries, the picture is not so rosy. For example, U.S. manufacturing is already in recession.

The United States was the best-performing advanced capitalist economy this year, with the country's real output increasing by about 2%. Elsewhere, other G7 countries are already in recession (Germany and Canada) or close to it (Italy, France, the UK, Japan). And some of Europe's smaller economies are shrinking (Sweden, the Netherlands, Austria, and Eastern Europe are also shrinking).

Even in that “lucky country” Australia, the situation is not much better. The country's real output is slowing, increasing by only about 1.5% this year. Australia's economic activity index fell to 46.4 in November, well below the 50 mark that separates expansion from contraction. The Australian economy has always been dependent on global economic growth, particularly the G7 economies and China, but these economies are in decline. Australia used to outperform OECD countries in national output per capita, but this has not been the case in the past decade. OECD economists expect Australia's economic growth to slow to 1.3% next year as unemployment rises.

Overall, the forecast for 2024 is lower than for 2023. The OECD predicts that global economic growth will slow from around 3% this year (an already low number) to 2.7% next year. Under such circumstances, the real GDP growth rate of advanced capitalist economies will slow from 1.5% to just 1.2% in 2024, and per capita GDP will approach contraction.

Meanwhile, world trade is decreasing. Global trade volumes were down 3.5% compared to the same month last year, the sharpest decline since the early months of the pandemic.

Borrowing rates have now more than doubled in the past two years and are expected to remain high, creating a serious risk of corporate defaults and bankruptcies across major economies.

According to the Institute of International Finance (IIF), global debt has reached a new high. Total debt across governments, businesses and households rose by $10 trillion in the six months to June to about $307 trillion, equivalent to 336% of global GDP. The World Bank estimates that 60% of low-income countries are highly indebted and at high risk of debt crisis, while many middle-income countries also face significant budget challenges.

Central bank interest rate hikes have sharply increased borrowing costs. There are no proposals from rich countries to cancel these debts. or abolish trade tariffs and export restrictions to emerging markets. Or, of course, stop multinational corporations from extracting huge profits from poor, resource-rich countries.

Even if the global economy, including the United States, can avoid a downturn in production, investment, and employment next year, it is clear that the economy will only be crawling.

The IMF sums it up by saying, “The medium-term outlook for global growth is the lowest in decades.'' The World Bank believes Asia faces one of its worst economic prospects in half a century. The countries of South Korea, Taiwan, Singapore and Hong Kong, previously known as the “Asian Tigers”, are at their slowest pace in 50 years as U.S. protectionism and rising debt levels weigh on their economies. It is expected to expand. The World Bank expects China's growth rate to slow to 4.4% in 2024, the slowest growth rate in decades, but still more than double the growth rate of G7 countries. UNCTAD's latest report predicts that “growth rates from 2022 to 2024 will be lower than pre-COVID-19 growth rates in most regions of the world economy.”

What is the reason for this slowdown and entry into recession? Output growth is driven by two factors: more workers working longer hours and increased productivity (more output per hour worked). will be done. Despite low unemployment rates, employment growth is slowing and productivity growth is slowing worldwide.

The U.S. Conference Board's latest estimates show that GDP per hour worked, the standard definition of labor productivity, rose just 1.2% this year from zero growth in 2022, but compared to the average of the 2010s. This was well below 2.6%. The average is down from the average for his first decade of this century). And those are worldwide numbers. Productivity in the top economies has increased by just 0.4% this year, while productivity in the United States has increased by just 0.2%.

The root cause of the slowdown in productivity and world trade is likely to be the slowdown in the growth of productive investment in major countries. Unproductive investments in finance, real estate, and now military spending have sustained growth so far. Investment in technology, education, and manufacturing fell. The basic reason is that the profitability of global productive capital has stagnated and even been on the decline for the past 23 years of the 21st century.

The world is currently facing a crisis on many fronts. With increasing global poverty and widening inequality, there is the potential for an economic recession in which real incomes stagnate or decline. There are still 3.65 billion people below the World Bank's $6.85 per day poverty line. A recent Global Risks Poll found that without income, 2.7 billion people could only cover their basic needs for a month or less, and 946 million of them could survive for at most a week. The United Nations goal of eliminating global poverty by 2030 is a mirage.

When it comes to wealth equality, Credit Suisse's latest report on global personal wealth shows that 1% of adults will own 44.5% of all global personal wealth in 2022, a slight increase from before the pandemic. did. At the other end of the wealth pyramid, the bottom 52.5 percent of the world's population owned just 1.2 percent of all personal wealth.

Most frighteningly, UNCTAD's latest report on the global economy shows that the world is way off track in tackling climate change, with temperatures on track to rise by up to 2.6 degrees Celsius above pre-industrial levels by the end of this century. This means that it continues. . To avoid the dire consequences of global warming, countries need to reduce gas emissions by 43 percent by 2030 compared to 2019 levels. But this is not happening.

Instead of governments working together globally to resolve this “hyperactivity crisis,” conflicts between nations are increasing, both economically and militarily.

While the U.S. economy may continue to stagger until 2024, the global economy is at a standstill.