The financial industry is clamoring to get ready for a global recession as economic growth continues to slow down significantly. Central banks across the world, especially the powerhouse economies like China and Germany, are set to introduce global monetary stimuli to stave off impending doom. Damon Vickers, New York Times bestseller and professional investor.
Damon Vickers clarifies factors for monetary stimulus
Unlike the strong, synchronized growth of the global economy last 2018, this year’s plight saw a decline in the momentum and diversification of trends that weakened many economies in the world. The US Federal Reserve is looking to cut interest rates in October and December, while Japan is also poised to loosen monetary policies due to the investor and counterpart pressure.
Additionally, central banks of South Africa, Brazil, Switzerland, UK, and Norway are set to have respective meetings amid the rising problem.
Damon Vickers, notes that the escalating trade conflicts, volatility, and rising interest rates have all contributed to the fiscal tightening in different parts of the world. These factors make the introduction of monetary stimulus imminent on a global scale.
Different stimulus from big economies
According to the IHS Markit, global growth stands to decrease from 2018’s 3.2% to 3.1% this year. This number will keep declining in the next several years.
This global economic slowdown has prompted several large economies to take action. US President Donald Trump advised a short-term tax cut on payroll to encourage consumers to spend more. However, Vickers says that a bipartisan agreement on legislation may not take place until a severe decline in the economy is already happening.
In China, fiscal easing comes in the form of infrastructure. Earlier this year, a $250B stimulus package consists of reduced social security contributions for the corporate sector and several tax cuts. Signs of economic slowdown are apparent despite this, which may prompt them to inject around $100-125B through infrastructure spending.
Germany, on the other hand, is considering implementing deficit spending as soon as the growth rate declines at an alarming speed. Their government also indicated a $55B allocation to boost employment and consumer spending should the worst-case scenario come.
“We will be seeing more global monetary stimulus in the coming months to years,” Damon Vickers suggests. “With the economy at a falloff, it’s not only a matter of when but also what measures are to be implemented to battle an upcoming recession.”
Shopping malls are facing a sharp decline in the past few decades. These days, meeting friends and hanging out the mall is a fading concept. Add to that the flourishing online retail market, and one would understand why people believe that shopping malls are dying.
According to Damon Vickers, expert investor and New York Times bestselling author of ‘The Day After The Dollar Crashes’ the plunge of shopping malls can be attributed to changing consumer trends and demands.
Shifting tides as noted by Damon Vickers
“Gone are the days when shoppers would go to a mall and visit 20+ stores in a day,” says Damon Vickers. “Now, the shopping experience is very surgical—they go to two or three shops, get what they came for and go.”
It’s also known that there is a common expectation for modern malls to be a one-stop lifestyle shop. Now, the shopping experience involves entertainment, food and socialization events. “It’s more of building a community than anything,” adds Vickers. Gen Z’ers and Millennials seem to have shifted to experience-buying (i.e., leisure travel, adventure) rather than materialistic shopping.
As shopping malls fight to keep up with times, some department stores that used to be the main pastime for pre-internet consumers are now being shuttered or refurbished into a different establishment altogether.
Is it transforming to farmlands?
Talks of shopping malls being converted to farmlands are surprisingly alive today, and it just might be the start of a transformation that not many people expected.
“It might sound like a downgrade, but on the contrary, farmlands are seen as a growing demand today,” Damon Vickers suggests. Consumers are shifting to organic living, from environmentally friendly items to green concepts.
The need for sustainable agriculture has seen an expansion in the past few years, which also contributes to the transformation of dead shopping malls into a newfound purpose.
It’s not a popular concept yet, but one that might become a growing trend as more people adopt green living, which is reoriented into schools, offices, homes, and communities. People are investing in sustainable farming to meet the global demands for healthier, eco-friendly solutions.
Despite the strains of redevelopment or demolition, shopping malls are not dying, according to Vickers. Major shopping centers across US and the world are still thriving, but they do have to keep reinventing their grounds to accommodate a shopper’s demand for better and more interactive retail and lifestyle spaces.
Lower for longer?
There has been a lot of buzz in the financial sector about the movement of interest rates in the world. In the global recession of 2008, interest rates saw a significant decline to stimulate the economy. Zero to below rates proliferated in that era to encourage people to spend.
This year, the talks revive anew as economy seems to slow down again. Central banks in New Zealand, Thailand, and India cut interest rates, with Australia believed to follow suit. It’s indicative of slowing growth on a global scale, notes professional investor Damon Vickers from New York, which could likely negatively affect rates.
In Europe and Japan, interest rates are below zero, which means consumers and businesses pay in order to deposit cash. Some experts believe that US might reach the negative end of prices, too, mainly since the US-China trade war is still a thing amid ongoing talks between the powerhouses.
While the world is still waiting for the Fed’s next move, the biggest question now is whether global interests are headed to zero. Damon Vickers believes that there is a 70% chance that the Federal Reserve might do another cut in December even with an apparent slash happening sometime in the last week of October.
The next moves of the Fed can affect the international market as a whole. Such rate reductions mean to stimulate the global economy to combat its slowing growth. It’s also timely since the Christmas season, one of the busiest in terms of market movement is coming.
Damon Vickers warns about the perils
The economy is slowing down, but there is no need to worry about the Great Recession happening again, according to Vickers. There are many factors to consider, including weak productivity growth and the aging population not only in the US but in other parts of the world.
Consumers might be taking the winning end of the stick, what with lower monthly costs for purchases like cars and houses. Businesses and borrowers can also benefit from it, but for every positive, there is an opposing downside to it.
“Easy money can be attractive, but also exposes consumers and businesses to economic stresses in the long run,” notes Damon Vickers. For instance, ATM fees and overdraft charges might increase due to slimmer profit margins for banks.
However, tension from early this year, such as the Brexit decision and trade wars, has significantly calmed down. This turn of events might mean the world is yet to experience negative rates for now.