Three mediocre years after the last recession ended, one of the world's leading economic policy advisers is warning that another may be on the way, as dawdling leaders in Europe and the U.S. fail to deliver the comprehensive solutions needed to restore growth.
"After five years of crisis, the global economy is weakening again," says OECD's top economist in its semi-annual assessment entitled Global Economy Facing Hesitant and Uneven Recovery. Since the Paris-based think tank's last report just six short months ago, the outlook for growth has worsened in all but three of its 34 member nations — including a forecast for two more years of mild recession in the euro zone, as well as a call for just 2% growth next year in the U.S.
"The most troubling aspect of this was their take on the U.S.," my co-host Jeff Macke says in the attached video. "They took our 2013 growth rate down to just 2% — and that's a best-case scenario that assumes we get a fiscal cliff deal done," he adds, calling the report more of an observation than an actual plan.
For its part, OECD is calling on global central banks to be prepared to take more action in the face of worsening conditions and the likelihood that elected officials, here and abroad, won't have the fortitude to properly address their fiscal imbalances and short-term threats. At the same time, the organization is also warning governments against becoming overzealous in their austerity efforts, saying that the simultaneous and cumulative effect of so many nations belt-tightening at the same time poses a serious threat of recession. On the other side of the equation, the group says even relatively prosperous places like Germany and China should consider implementing fresh stimulus plans of their own.
And so, just when you thought it was safe to get back in the water, as they say in the film "Jaws," we get a fresh reminder that the health, wealth and prosperity that all of us want from the New Year may actually just be more of the same. Expect another year of lukewarm growth and political hand wringing as we seek easy ways to get out of (or delay) our painful fiscal reality.