Switzerland Tops World's Most Competitive Countries Index (Yemen Least)

Something else "Murica is no longer #1 in...

A recently released World Economic Forum report has found that the global economy is recovering well nearly a decade on from the start of the global financial crisis with GDP growth hitting 3.5 percent in 2017. The eurozone in particular is regaining traction with 1.9 percent growth expected this year. As Statista"s Niall McCarthy points out, the improvement in Europe"s economic fortunes can be seen in the report and the following infographic which shows that six European economies are among the world"s ten most competitive.

You will find more statistics at Statista

The World Economic Forum defines national competitiveness as the set of institutions, policies and factors determining productivity levels. 

Switzerland grabbed top spot in the report with an index score of 5.86 out of 7, recording strong and balanced results across the most important determining factors such as health, primary education and a reliable macroeconomic environment.

The United States comes second for national competitiveness, though the report notes that it needs to improve its macroeconomic environment as well as health and education, both of which scored poorly.

Eight of the world"s ten worst countries for national competitiveness were in Africa.

Yemen has been devasted by war in recent years and it comes bottom with a score of 2.87. It was followed by Mozambique and Chad, both of which had a score of less than three. The only other non-African country in the bottom ten was Haiti which scored 3.22.

Business Investment Might Be Trump's Achilles' Heel

The U.S. economy is suffering from a major long-term problem: business investment is weak. Unless President Trump solves this problem, it will prove to be his Achilles’ heel. 

As the accompanying chart shows, net private domestic business investment (gross investment – capital consumption) is relatively weak and has been on a downward course since 2000. Indeed, ever since the Dot-Com bubble burst, private investment has been in the tank. Neither the policies of the George W. Bush nor Barack Obama offered an elixir. Investors turned their collective thumbs down on both presidents.   

 

So, just why is private investment so important? It is what fuels productivity.  With little fuel, we should expect weak productivity numbers in the U.S. Sure enough, as shown in the accompanying chart, the rate of growth in productivity is weak and has been trending downward. The U.S. is in the grips of the longest slide in productivity growth since the late 1970s. This is alarming because productivity is a key ingredient in determining wages, prices and economic output.

 

When we take a look at aggregate demand in the economy, which is measured by final sales to domestic purchasers, it is clear that the U.S. is in the midst of a growth recession. Aggregate demand, measured in nominal terms, is growing (4.32%), but it is growing below its trend rate of 4.70%. As the chart below shows, the below-trend growth in nominal aggregate demand has characterized the U.S. economy for a decade. To put this weak growth into context, there has only been one post-recession recovery since 1870 as weak as the current one: the one following the Great Depression. 

 

Will President Trump be able channel Harry Houdini and extricate the U.S. from its private investment drought? He just might. If Trump can stay focused on developing supply-side tax reforms and deregulation initiatives, he might alter what has been an ugly private investment environment. If not, private investment will continue to be a drag on the U.S. economy, and his economic legacy.

This piece was originally published on Forbes. 

China Imports Spike As Lunar New Year Skew Creates Biggest Trade Deficit In 3 Years

When the headline prints hit tonight on China"s trade data, offshore Yuan dipped and ripped...

As China faced its first trade deficit in 3 years (-$60bn vs +172.5bn exp)...

Obviously there is some major seaonality...

With imports exploding 44.7% YoY (and exports missing expectations dramatically +4.2% vs +14.6% exp). But it appears the economists forgot about this year"s lunar new year holiday falling in January (vs Feb last year).

As Bloomberg points out, the results were skewed because the week-long Lunar New Year holidays that shutter factories and ports across the nation occurred in February 2016 versus late January in 2017, distorting base year comparisons.

Even though the specific data point is entirely worthless, we note that Imports from U.S. rose 41% to 163.5b yuan in Jan.-Feb., General Administration of Customs says in statement.

For now it appears Bitcoin is suffering the most post-data (but this could be renewed selling pressure from this morning ahead of this weekend"s ETF decision)