Global recession risk has suddenly jumped several notches. The accumulated damage from Donald Trump’s trade wars and worldwide monetary tightening is taking its toll. We are one shock away from a contractionary vortex that would be extremely hard to control. In America the Federal Reserve’s instant tracking gauges of GDP growth have halved since late January. They are approaching stall speed. In China it is becoming clearer that the Communist leadership either cannot or will not engineer another brake-neck credit boom to revive an economy slipping into structural stagnation. Stimulus is trickling through but it is a pale image of past reflation cycles. This is hard to square with the blistering asset boom over the last two months. The MSCI index of world equities has risen 15pc. Wall Street’s S&P 500 is up 18pc. Bears have been mauled. Big global banks and funds bought into this relief rally on early evidence of synchronised ‘policy capitulation’ by the G2 economic superpowers: the Fed’s rhetorical retreat after its ill-judged rate rise and hawkish message in December; Beijing’s pledge to avert a hard-landing at the Central Economic Working Conference. This had echoes of the Fed rescue in early 2016, which bought another lease of the global expansion and proved to be a bargain-basement buying moment. Yet the comparison has its limits.
US President Donald Trump 's currency wars and global monetary policy is raising the threat of another worldwide recession , wrote Ambrose Evans - Pritchard for The Telegraph . The US Federal Reserve 's tracking gauges of GDP growth have halved in the past year , while it is facing a potential slide into structural stagnation . As such , the US could be just one shock away from a global downturn .