WSJ: Weak Data, Market Turmoil Shake Confidence in Global Economy

Thursday, 06 Feb 2014 06:28 AM

By Dan Weil

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A variety of negative economic news and market developments have led to a questioning of global economic growth.

Stock prices have dropped around the world; the U.S. and China have released several weak economic reports; and Turkey, India and South Africa have implemented sudden interest rate increases, The Wall Street Journal reports.

In the U.S., auto sales fell 3.1 percent in January, new homes dipped 0.9 percent and the ISM factory index slid more than expected.

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The economy expanded 1.9 percent last year, and some analysts have forecast an increase to 3 percent this year, but now that's under question.

"Maybe the U.S. will not have the solid year everybody had been expecting," Harvard University economist Kenneth Rogoff, told The Journal.

And it's not just the United States where he sees uncertainty now. "Maybe China will have much slower growth. Maybe problems in emerging markets that seemed four or five years down the road were four or five months down the road instead," Rogoff said.

That sentiment represents quite a change from what he witnessed at the World Economic Forum last month--"this incredible optimism that nothing could wrong" in the global economy, Rogoff said.

Still, Mark Zandi, chief economist of Moody's Analytics, maintains that the U.S. economy is expanding 3 percent, but that's "getting masked" by the stormy and cold winter weather.

"Nothing changed in December, January fundamentally," he told CNBC. The weather has been a "mess, and it's been like this for a couple of months," Zandi said.

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