TODAYS TOP HEADLINES
The Times, Gainesville, Georgia | gainesvilletimes.com
Wednesday, November 21,2018 3A
Dark clouds starting
to overhang global
economic expansion
STEPHEN B. MORTON I Associated Press
A ship to shore crane prepares to load a 40-foot shipping
container onto a container ship at the Port of Savannah in
Savannah, Ga., July 5.
BY JOSH BOAK AND
JOE MCDONALD
Associated Press
WASHINGTON — After
galloping along for the
past two years, the global
economy is showing signs of
weakening, with the United
States, China and Europe all
facing the rising threat of a
slowdown.
Few economists foresee
an outright global recession
within the next year. But the
synchronized growth that
powered most major econo
mies since 2017 appears to be
fading. The risks have been
magnified by the trade war
raging between the United
States and China, the strife
dividing Britain over an exit
from the European Union
and the Federal Reserve’s
continuing interest rate hikes.
It’s all been enough to con
tribute to a broad retreat in
global stock markets. Count
ing Tuesday’s deep losses,
U.S. stock indexes, once up
around 10 percent for the
year, have surrendered all
their 2018 gains.
The Fed is expected next
month to raise its key short
term rate for the fourth time
this year. The central bank’s
rate hikes help control infla
tion. But they also make loans
costlier for consumers and
businesses. And for countries
that borrowed in U.S. dollars,
the Fed’s hikes make debts
harder to bear. Argentina, for
one, has slid into recession as
its cost of repaying its debt
has surged.
“We can’t continue to grow
this fast for much longer with
out risking inflation,” Adrian
Cooper, chief executive of
Oxford Economics, said of
the still-solid U.S. economy.
“That’s ultimately what the
Fed is trying to achieve with
its steady movement in inter
est rates. The skill is to do so
in ways that don’t create a big
downturn.”
The concerns have grown
enough that Larry Kudlow,
President Donald Trump’s
top economic adviser, on
Tuesday dismissed the wor
ries roiling the markets.
“Recession is so far in the
distance I can’t see it,” Kud
low told a group of report
ers outside the White House.
“Keep the faith. It’s a very
strong economy.”
The collective growth of
the world’s major econo
mies in the past two years
was broadly welcomed after
a feeble recovery from the
2008 financial crises. Yet few
economists saw accelerated
growth as sustainable — or
even desirable — over sev
eral years.
The concern is that a pro
longed global expansion
could ignite inflation or spec
ulative investing that would
inevitably send vulnerable
economies into a downturn.
Compounding the challenge,
the world’s economies
are linked more than ever
through trade, finance and
investment — to the point
that a rupture in one major
nation tends to spread across
the globe.
Oxford Economics pre
dicts that the growth of the
global economy, as measured
by its gross domestic product,
will slip from 3.1 percent
this year to 2.8 in 2019. Such
a slowdown is enough to
crimp corporate profits and
business investment, Cooper
said. Still, most American
and European workers prob
ably wouldn’t feel the pain,
he said, in part because of
a resilient job market and
lower oil prices.
“2019 is still going to look
pretty good — your job is
going to be safe, and your
wages are going to rise,” Coo
per predicted while adding
that he thinks the slowdown
will worsen in 2020.
In the meantime, though,
stock markets have endured
waves of jittery selling as
investors have tried to fac
tor in a slowdown that could
depress the growth of com
pany profits.
“Financial markets have
become a little more volatile
and anxious of late, worried
about slowing global growth,
trade tensions, Brexit woes
and concerns that the U.S.
may not be able to sustain its
current cyclical sweet spot,”
said Josh Feinman, chief
economist at Deutsche Asset
Management.
Over the next two years,
most forecasts suggest that
U.S. growth, after cresting
above 3 percent this year
— its best performance
since 2005 — will weaken.
Fed Chair Jerome Powell
acknowledged in a speech
last week that the strong
worldwide growth of 2017 is
in retreat.
“You see signs of a gradual
slowdown,” Powell said.
Goldman Sachs foresees
annual U.S. growth slowing
to 1.75 percent by the end of
2019. The predicted weak
ening stems, in part, from
the front-loaded stimulus of
the tax cuts Trump pushed
through Congress. The boost
from the tax overhaul is
expected to wane by 2020.
One continuing threat for
the U.S. economy is Trump’s
trade war with China. The
president has imposed a 10
percent tax on $200 billion
of Chinese goods — a tariff
that’s set to escalate to 25
percent in 2019. He’s also
threatened to add tariffs on
$250 billion more in Chinese
goods.
A prolonged trade crisis
would depress the global
exchange of goods and,
therefore, economic growth.
Trump is set to meet with
President Xi Jinping at a
Group of 20 international
meeting in Argentina next
week. But prospects for a
breakthrough seem to have
dimmed.
“Both countries appear
to be far apart on the trade
dispute and unwilling to back
down at this point,” said Scott
Anderson, chief economist at
the Bank of the West.
Similarly, political rup
tures threaten to slow the
pace of Europe’s five-year
expansion.
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LEFTERIS PITARAKIS I Associated Press
Candles, lit by activists, protesting the killing of Saudi journalist Jamal Khashoggi, are
placed outside Saudi Arabia’s consulate, in Istanbul, during a candlelight vigil on Oct. 25.
Trump won’t punish Saudis
for killing of WP journalist
BY DEB RIECHMANN
Associated Press
WASHINGTON — President Donald
Trump said Tuesday the U.S. will not pun
ish Saudi Crown Prince Mohammed bin
Salman at this time nor cut arms sales to
Saudi Arabia for the killing of U.S.-based
columnist Jamal Khashoggi.
Trump called the killing of Khashoggi
inside the Saudi consulate in Istanbul a
“horrible crime” that the U.S. does not con
done, but said Saudi Arabia is a “great ally”
and canceling billions in arms sales would
only benefit China and Russia, which
would be glad to step in and make the sales.
Trump’s decision, announced in a state
ment released just before he left for the
long Thanksgiving weekend in Florida,
will disappoint and anger critics who have
called for a much firmer rebuke to the
kingdom and especially bin Salman.
U.S. intelligence officials have con
cluded that bin Salman, the kingdom’s de
factor leader, ordered the Oct. 2 killing,
according to a U.S. official familiar with
the assessment. Others familiar with the
case caution that while it’s likely that the
crown prince had a role in the death there
continue to be questions about the degree
to which he was involved.
The U.S. earlier sanctioned 17 Saudi
officials suspected of being responsible for
or complicit in the killing, but members of
Congress have called for harsher actions.
Trump said Tuesday in his statement
that the king of Saudi Arabia and the crown
prince “vigorously deny” any knowledge of
the planning or execution of the murder of
Khashoggi.
“Our intelligence agencies continue to
assess all information, but it could very
well be that the crown prince had knowl
edge of this tragic event — maybe he did
and maybe he didn’t!” Trump said.
“That being said, we may never know all
of the facts surrounding the murder of Mr.
Jamal Khashoggi. In any case, our relation
ship is with the Kingdom of Saudi Arabia.
They have been a great ally in our very
important fight against Iran.”
He said the United States intends to
remain a steadfast partner of Saudi Arabia
to ensure the interests of the United States.
“America First!” he wrote.
Trump said he knows some members of
Congress will disagree with his decision.
He said he would listen to their ideas, but
only if they are focused on U.S. national
security.
Late last week, a bipartisan group of sen
ators introduced legislation that calls for
suspending weapons sales to Saudi Arabia;
sanctions on people who block humanitar
ian access in Yemen or support the Houthi
rebels, and mandatory sanctions on those
responsible for Khashoggi’s death.
France’s top diplomat said Monday that
his country was mulling sanctions against
Saudi Arabia. And Germany on Monday
announced that it has banned 18 Saudi
nationals from entering Europe’s border-
free Schengen zone because of their sus
pected connections to the killing. German
officials, who earlier banned new weapons
exports to Riyadh, also said they were halt
ing previously approved arms exports.
Some foreign policy experts have not
only recommended tougher punitive mea
sures against Saudi Arabia, but have advo
cated for a complete reset on relations with
Riyadh.
Emile Nakhleh, a former member of
CIA’s senior intelligence service, said that
since the crown prince assumed power
three years ago, he has turned his country
into a “strongman autocracy” that can’t be
trusted.
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Please donate to Love Light in honor or
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