Even though the global economy is experiencing the worst downturn since World War II, that doesn’t mean every country is being equally affected. Leaving aside the (big) question of how reliable official statistics are, it’s clear that there’s something of a divide between the developed and emerging worlds.

Global Statistics

For now, at least, the economic up-and-comers are at the top of the list as far as growth and inflation are concerned, though there are some interesting exceptions (e.g., Taiwan).

Not surprisingly, the more mature economies feature prominently among those countries with high rates of unemployment, which likely stems from differences in wage rates and labor market rigidities, among other things.

Otherwise, India is a curious amalgamation: high growth, high inflation, and a budget deficit that is second only to that of the U.S. (note: India’s unemployment data was not available from Bloomberg).

No doubt some will claim that “decoupling” accounts for the divergences, but from what I remember, proponents of the theory had argued before the current crisis began that the emerging world would be relatively unaffected by a slowdown in the U.S. Clearly, that has not been the case.

Category: Economy, Investing

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

36 Responses to “Not the Same All Over”

  1. wally says:

    I notice that energy consumption in China declined last month. Just sayin….

  2. franklin411 says:

    Mexico’s in a civil war, so I wouldn’t be surprised if that would depress their GDP.

  3. Thor says:

    Good news for India – especially considering more than half their population is either malnourished or without access to clean water.

  4. Andy T says:

    Wow. China leads in GDP growth but somehow the CPI is down….I think it’s the only one of the GDP “growth” economies experiencing such an interesting phenomenon….

    I’m sure those GDP #s from China are very reliable….ha!

  5. call me ahab says:

    incredible growth and lower CPI-

    wow- why can’t we do that-

    China must have it all figured out

  6. HarryWanger says:

    That chart should change fairly significantly with Q3 and Q4 GDP numbers in U.S.

  7. Is that chart supposed to be clickable? How can all you old guys read that thing?

  8. HarryWanger says:

    James Grant had an excellent article in WSJ: From Bear to Bull

    “I promised to be bullish , and I am (for once)–bullish on the prospects for unscripted strength in business activity. So, too, is the Economic Cycle Research Institute, New York, which was founded by the late Geoffrey Moore and can trace its intellectual heritage back to the great business-cycle theorist Wesley C. Mitchell. The institute’s long leading index of the U.S. economy, along with supporting sub-indices, are making 26-year highs and point to the strongest bounce-back since 1983. A second nonconformist, the previously cited Mr. Darda, notes that the last time a recession ravaged the labor market as badly as this one has, the years were 1957-58 –after which, payrolls climbed by a hefty 4.5% in the first year of an ensuing 24-month expansion. Which is not to say, he cautions, that growth this time will match that pace, only that growth is likely to surprise by its strength, not weakness.”

    Excellent points in this article from a famous Bear. Everyone should read when they have a chance.

  9. Thor says:

    Michael – Aaaaah, much better!

    interesting to see Mexico on there – would imagine that much of this is due to the drop in oil prices as well as the massive reduction in remittances being sent home from the US. California’s foreign born population dropped for the first time last year, I can imagine many of the migrant workers are returning home, further reducing remittances and clogging Mexico with newly returned unemployed workers.

  10. beaufou says:

    India has apparently a 7% rate with high levels of under-employment.

    High growth sustained by government expanditure, so high deficit.

  11. HarryWanger says:

    Michael: I read your response via Paul Kedrosky’s site. It seems you have fallen into the last bastion of false hope for the bearish camp,

    “Should we really be preparing for the best right now — instead of the worst — given how many icebergs –like the accelerating meltdown in commercial real estate and the mortgage reset timebomb — are only just floating into view?”

    Now we are beginning to see that the “accelerating meltdown in commercial real estate” isn’t so awful as most feared. Actually, not even close. And regarding “the mortgage reset timebomb”, Paul Miller addressed that wonderfully posing the case that this reset will hardly be noticeable as it occurs.

    It appears with inventory restocking, etc., we are staring at a mini boom in the economy heading our way. With that will come job growth as the economy sustains a steady and realistic growth rate in the coming quarters.

    • HarryWanger: Given what Daniel Tishman had to say yesterday, you might want to rethink your views on commercial real estate:

      Commercial real estate is the “second shoe” to drop in hurting the economy, Daniel Tishman, chairman and CEO of the Tishman Construction Corporation told CNBC.

      “We’re getting through the single housing real estate market OK but the numbers involved in commercial real estate in all sectors are staggering,” Tishman said. “Trillions of dollars are involved in commercial loans. The roll over of those loans in the next 5-7 years is going to happen and the money just isn’t there for refinancing.

      Commercial Real Estate Is Next Bubble to Burst: Tishman
      CNBC, Monday September 21, 2009.

  12. DL says:

    For all you Peter Schiff fans out there:


  13. leftback says:

    Wanger, a wise man told me that Rallies End When Bears Grow Horns.

  14. HarryWanger says:

    leftback: I agree with that statement, oddly enough. Where I and some others differ is that I don’t think this is truly a “rally”. It’s a correction to the level we should be at in the markets. Once that equilibrium is hit, which I think is somewhere Dow 11,500+, then upward movements become rallies. This is merely a correction in the market to take us to fairly priced equilibrium. So it’s not so much being bearish or bullish, I think it’s just being realistic.

  15. emmanuel117 says:

    I noticed Harry’s shift from new bull market to mini-boom.

  16. leftback says:

    Harry: Hardd to see equilibrium in the recent oscillations – when we have been so FAR BELOW the 200DMA (March) and now so FAR ABOVE the 200 DMA (now). I was bullish in March, BTW, so I am not a total doomsday merchant. I imagine we will see another extreme move before we are done and an eventual reversion to the mean.

  17. nemo says:

    “Mexico’s in a civil war, so I wouldn’t be surprised if that would depress their GDP.”

    What are you talking about? Some low-level ongoing conflict with the Zapatistas in Chiapas? Some low-level ongoing conflict with drug cartels? Those aren’t civil wars.

    The civil war that followed the 1910 Mexican Revolution killed 6% of the total population. That’s a civil war. The American Civil War of the 1860s. The Russian civil war of the Reds against the Whites in the early 1920s. Those were civil wars.

    The conflicts in Mexico may be a drag on the economy, but they ain’t civil wars and they ain’t causing the kind of drag a real civil war would cause. Mexico’s bigger problems are corruption, gross inequality, under-development, and excessive dependence on oil exports.

  18. HarryWanger says:

    Michael: Regarding CRE, “the next shoe to drop” is getting as irritating as “green shoots”. So much so that there are blogs counting how many times we’re reminded of “the next shoe to drop”. Two points that I agree with.

    1) CRE shoe is falling and has been falling for some time. I don’t see this as a “shoe to drop”. It already fell with room to fall further admittedly.

    2) Since everyone and their entire family knows about CRE as “the next shoe to drop”, don’t you think it’s been priced in? Average Joe has heard all the warnings about CRE since early 2008 and is told about it almost daily. My feeling is it’s priced in and CRE will continue falling at a rate that will not drag on GDP as a bomb exploding.

    We’re actually at a fairly exciting time with the economy. So much gloom is led to underpriced equities. As long as that gloom exists and our “mini economic boom” continues, the markets will reflect that.

  19. franklin420d says:

    Harry, I am very, new to this economic stuff and although I have learned a great deal over the last few months and realize the more I learn the more I need to learn. Coming to Mr Rithotlz blog I have come to believe he is taking a short term bullish stance, I have researched and re-read some of his posts and from my very novice viewpoint believe he is correct. One of the reasons I believe this is because of the title wave of money that has been thrown at re-inflating our economy. It saddens me to see things progressing like they are, the sadness is not because I want to see despair the sadness is because what happens after a title wave is death and destruction.

    I have no clue what an indice is or how it can lead the way to 20% growth, but after doing my own searching and re-checking my views of human nature, I do believe a wave is upon us and it may be a surprisingly strong wave that can take us for a longer ride then most might suspect. My question to you is what will sustain us? Continued debt? Lower paying jobs, if any? A housing market that is in disarray? A population base that is heading into retirement, (if they can)

    I for one hope you are correct that “steady and realistic growth” is just around the corner and for the short term this very well could be true, but just all bubbles will pop, this wave will crash. Then what?

    BTW- Did you get a chance to watch the Husky game?

  20. beaufou says:


    It could end up like colombia and be a permanent armed conflict, the support behind drug cartels is related to poverty and corruption at government level, so it has a civil side.

    “what so civil about war anyway”

  21. call me ahab says:

    well if all you folks remem-ber the debate about subprime- long before it impacted the economy- the debate was there for all to evaluate-

    and the result was economic devastation- so-

    a fool can say commercial RE is not a problem out of hand- but myself- I listen and evaluate

  22. Simon says:

    What goes up must come down. When is the issue.

  23. HarryWanger says:


    -What will sustain us? The market will hit equilibrium as I anticipate around 11,500+. It won’t take much to sustain the market at that level once it has corrected. Economically, we are not creating a bubble. I have stated before that we had a bubble and it burst. Unfortunately, that affected many, many people. The jobs lost were artificial in a sense since they supported the bubble. With that crash comes the opportunity for growth. Yes, I do think, unfortunately, that the recovery will not include tremendous job growth.

    -I don’t believe the housing market is in “disarray” any longer. We’ve stabilized. That bubble has burst and the fallout hurt. But we needed that pain to flush out the system. Again, unfortunate, but this flushing of the system allows for sustainable pricing, which we are beginning to see.

    I missed the game, I was up in the Cascades this weekend hanging out at a cabin with no television. Wish I would have seen it.

  24. franklin420d says:


    You missed a great game, I did not expect them to win though. But being up in the Mts with no tv is just fine too, beautiful area up there.

    Lets say you are correct and the market is marching toward equilibrium and is not creating a bubble. What are the factors that cause you to believe we are heading toward equilibrium and not a step down and how can any growth (real or bubble) be sustained with so much debt behind it?

  25. Had Enough says:

    I would like to ecco Thor’s observation and congratulate Indians on their superb performance. The many proud expats I have had the pleasure to meet here in my country can rest assured that their growing hubris is well founded on this fresh data confirming the continued rise of the Indian superpower miracle.

    Many of may downplay India’s economic performance to which we have been witness this year citing all sorts of valid yet negligible stuff – but I sure didn’t. 6.1% GDP growth AND a budget deficit up there with the big boys. Wow!

    I’m curious how you can get that when the government spends virtually nothing on the people, the vast majority suffering in want and squalor. That, gentlemen, cannot be the result of pure accident. No sir. It takes real effort and ingenuity of the South Asian variety to make stuff like that happen.

    On the other hand, kudos for “missing” the employment data! I’d do the same if I wanted to present a more favorable picture of my failed country to the rest of the world to support the new-found vanity of my educated elite – many of whom would be unsurprisingly missing from the job roles as they strangely insist on seeking work in Europe, Australia , the U.S. or anywhere else that is not India rather than actively participate in the economic miracle that they love to talk about. Just doing their part, I suppose, to keep our unemployment figures robust and growing from all the extra competition for jobs that require some education or technical skills.

    Thanks guys, keep up the good work!

  26. alfred e says:

    Witha a few exceptions the charts show the evolving slash and burn. Move manufacturing and service to the cheapest adequately developed country. And when that country becomes supplanted and not a competitive choice move on. Japan came first then Taiwan then South Korea, then … India and China.

    Only remaining question is who succeeds India and China?

    Afghanistan? Is that why we’re there? Hard to believe. No, they don’t have the skill sets. Unless ….

  27. Greg0658 says:

    echo .. echo …. echo ……..

  28. deepakshenoy says:

    Indian CPI is flawed at the mo. Had written about it (http://blog.investraction.com/2009/03/consumer-price-inflation-cpi-flawed.html)

    WPI is inching up – it’s at 0.12% and food price inflation is around 15% already. We’re a huge user of sugar and prices of sugar have gone through the roof.

    India’s deficit increase has come from three huge factors. 1.5% of GDP is from forgiving farmer loans last year (election gimmick). 1.% of GDP from an increase in government employee salaries (including arrears paid out just about now) and nearly 3% from fertilizer subsidies. There’s also a stimulus package in terms of lowered excise duties, lower taxes on certain items, interest rate subvention for smaller mortgages and so on.

    India’s exports are down 20%+. The index EPS has been declining over a year now – EPS growth on an index basis is (-5%). Our Index is now up 100% from it’s lows of Oct-Feb, so it’s decoupled in the sense that it’s running faster; not necessarily followed by fundamentals.

    There’s a real estate bust waiting to happen; in our cities we pay nearly as much as you do for condos (in the US). Where I live (Gurgaon) the price of a 2000 sq. ft. house (not apartment) is a cool 300K, and they sell houses without appliances. That’s fairly high considering the income differential is probably 5x even today. There’s not enough data about housing prices and wages, so I can’t point to any public sources.

    Lending – our banks have been able to hide bad loans and not mark assets to markets, because they decided they wanted not to. Banks here don’t use tangible equity; measured like Risk weighted assets, with weird risk weights are common. Must explain all of this in a post, but suffice it to say things are not as good as they look.

  29. Had Enough says:


    “…price of a 2000 sq ft. house is a cool 300K… That’s fairly high considering the income differential is probably 5x even today.”

    Which are you contending here, that incomes in Gurgaon are probably 1/5 those of the U.S. or that the typical Indian income in Gurgaon is approximately $60,000 per year ($300K/5) – in other words, about $15,000 more than the median U.S. family income in 2009.

    In either case you must be exaggerating by leaps and bounds.

    I’d like to know which bank in India would float loans for houses to Indians with mostly unstable sources of income for US$300,000 who make, by your reckoning, a paltry $9,000 – more than 33x the family income in Gurgaon – especially after the easy credit era ALREADY ended poorly in the developed world. With prices already so high for consumables in India, how the hell are they saving money for the down payment with 15% inflation?


    How is it that median or mean Gurgaons families are making so much income? More than typical family incomes for cities in most industrialized nations? Is Gugaon a city of ganja dealers? So if Gugaon is a town of millionaires, then where do the rest of the 1+ billion (and growing) hungry slumdogs live?

    I smell Desi B.S.

  30. Had Enough says:


    Oh, and don’t worry about the precipitous decline of India’s exports (-20%). They’ll be up again as soon as they are able to find new employers here in the U.S. willing to sponsor them for H1-B visas.

  31. deepakshenoy says:

    @Had Enough

    What I meant by Income differential being 5x: for a similar profile you will find the worker in India paid 5x lower. Come to think of it – at the higher levels it would be around 3 times from what I’ve seen (as I said, don’t have data sources). But at the tech/mid income levels 5x is normal (You’d pay someone Rs. 500,000 – or $10K for doing what would cost $50K in the US)

    People who own these houses worth $300K earning $60K per year: may be so for the new buyers, but a good number of owners bought these houses a long time back, when prices were a lot lesser. There aren’t that many new buyers – the super premium pricing makes it difficult to buy (or sell!) except for the rich buyer, who is not the “typical gurgaon resident”. These houses are out of reach, and most people here seem to buy condos/apartments. Given the lack of transparency in the RE market, it will take a long time for the real supply/demand equation to be revealed.

    (I wish I had more data about mean/median incomes and mean/median house prices to give – that would give a better context, but unfortunately I’ve nothing other than circumstantial evidence to offer. Income stats: http://www.payscale.com/research/IN/City=Gurgaon/Salary has some stats, can divide by 50 to get $ amounts. )

    Even the condos here (check out http://www.makaan.com and such) – the more decent ones – are priced at Rs. 75 lakhs – about $150K – for an 1800 sq. ft place (sans appliances).

    But it’s not fuelled entirely by bank credit. People here have a lot more down that in the US – they call it “black”, or cash, that is not reported to the authorities. You can get a loan only for the rest (for which you gotta put 15% down) – so you might have a LTV of 70% at the max.

    The “bubble” happens in new “under-construction” buildings where you can choose to pay in installments through the progress; and people flip a house long before the two years of scheduled construction is done. Eventually someone’s left holding the bag, and like now when prices have stagnated over a year, it starts to hurt. Something will give; it’s not an if but a when now. We have some unparalleled liquidity so yeah, things could stretch further before they turn around.

    And, luckily, we didn’t get into HELOCs so people couldn’t quite cash in from the home ATM. But foreclosure has been a difficult process to get through the courts, sell etc. so it will impact banks in some way. Still, the real estate crash may not necessarily result in a credit crunch.

    Prices of consumables high? Food isn’t that big a deal for the urban house buyer, who probably spends only 20% on food (you spend more on rent+fuel than on food, but our CPI doesn’t reflect that) People save an obscene amount here – but there’s no social security so you need to.

    Exports and H1-B visas – you got them mixed up. Exports aren’t a result of US companies hiring Indian employees.

    To continue that thread, some exports do happen by Indian software companies getting H1-Bs for some of their own employees. This is approximately diddly squat of our total exports. Note also that the H1-B quota of 65,000 visas – usually filled up in earnest by April – has seen only 45K filings till end Aug.