Market Review: London December 2008 Commentary
Testing Economic Times
Even those such as ourselves that feared for the global economy’s outlook in 2008-9 have perhaps been surprised by the severity of the current economic downturn.
We were aware that US consumers were not only notionally ‘addicted’ to credit, but fundamentally cash flow negative. And therefore horribly exposed to any deterioration in the health of the credit system. Yet, even we have been surprised that US retail sales declined by nearly 5% in dollar terms in the three months to October.
An annualised rate of decline of more than 19% in nominal terms (let alone adjusted for inflation) in retail spending in the world’s largest economy is simply unprecedented in the modern era and certainly bears comparison to the Great Depression of the 1930s.
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