George Soros doesn’t make statements on Bloomberg about the economy or world markets unless he has data to back those statements up. Soros is a knowledgeable investor. But he is also an economic wizard that has predicted recessions in the past. Soros not only examines the obvious signs of a pending recession, but he also looks at the finer points that usually happen before a recession becomes a reality.
Those signs are present in the U.S. right now, according to Mr. George Soros, and most Americans have no idea what they mean. Retail and wholesale sales figures are a good measuring stick for a pending recession. When sales are good the GDP rate grows. But retail and wholesale sales are dropping. Online retail sales are increasing, but brick and mortar sales are taking a beating. Factory orders in America dropped at the end of 2015, and that is another indicator that GDP rate is slowing.
The Unites States export business is also having issues, and corporate profits are down. According to Soros, when you add those signs to the China economic situation and the potential Collapse of the European Union, a global recession is on the way. Mr. Soros told a Bloomberg.com interviewer that it’s not a matter of if a recession is coming. It’s a question of how much of the world’s economy will contract. China can’t continue to invest capital reserves to hold their stock market together, and the European Union can’t continue to bailout their bankrupt members.
The other issue that is one of the roots of potential recession is, the emerging market expansion bubble is bursting. Brazil is suffocating from its own shortsightedness, and Russia has a host of issues including an embargo. South Africa’s export business is on the ropes and even Taiwan is starting to feel the effects of their slowing economy, according to Soros. Soros said the biggest profit growth in recent years has come from investments in emerging market export capacity, but that was not the case in 2015. U.S. companies are trying to deal with the continued weakness in emerging markets. The emerging market economic slowdown is having the same effect on the global economy as the housing bubble had on the 2008 economy.
Soros also said oil is playing a role in the slowdown especially in countries like Russia, Brazil, and Venezuela. When all these obvious and fine signs are combined, economists believe the world market is already in a recession. It just hasn’t shown it face in the United States yet. Some economists say it won’t impact the U.S. too much as long as the dollar is strong, but Soros thinks those people are not looking at the impact of all the signs. They are being selective and this recession is not selective because every country is playing the export game.