UBS Makes A Striking Discovery: Ex-Energy, US GDP Growth Is The Slowest Since 2010

Monday, November 13, 2017
By Paul Martin

by Tyler Durden
ZeroHedge.com
Nov 13, 2017

Last week, UBS released its Global Economic Outlook forecast for 2018-2019, which coming in at over 220 pages and with more than 270 charts, is rather “difficult to summarize” as UBS’ chief economist Arend Kapteyn snarkily notes. Still, as Kapteyn helpfully summarizes, the 3 charts below capture some of the main themes from the report, the first of which is a doozy and crushes the Trump “economic recovery” narrative .

Message 1: The 2017 global growth acceleration was largely (70%) a commodity bounce. This applies even to the US which was 20% of the global growth improvement but, as the 1st chart below shows, it was entirely energy investment. Once you strip that out ‘underlying’ growth is only 1% or so (ex inventories) – the slowest since 2010 – and a significant amount of rotation now needs to take place from energy to non-energy investment just to sustain the current growth pace. The surveys suggest that is possible but the surveys have also consistently overstated growth so far. As Kapteyn adds, due to “skepticism about that rotation is why we are about 20bp below consensus for US growth next year.” It also means that contrary to conventional wisdom, the US consumer has not only not turned the corner, but continues to retrench and with the personal savings rate plunging to 10 years lows, there is little hope that personal consumption expenditures will be a significant driver of US growth for the foreseeable future.

The Rest…HERE

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