With another 2 percent or so decline on Tuesday, U.S. stock indices have given up their gains for the year. The rout that started in tech stocks has moved to oil shares amid worries about global demand, as well as to retail stocks, which suggests concern about whether consumers will continue their pace of spending as asset prices fall.
It?s a legitimate worry. The job market has been strong, and small business confidence remains high, but those tend to be lagging indicators. With the world economy showing strains, the chances of a significant U.S. growth slowdown can no longer be ruled out. We?d note that our contributor Donald Luskin, the financial adviser and long-time growth optimist, has put himself on recession watch.
Another reason to worry is the nearby chart, which tracks the quarterly change in world trade volume from 2015 through mid-2018. Note the sharp decline in the rate of growth in global trade in the first half of 2018.