Global Data Watch The tyranny of the commons-111102749

Global Economic Research26 October 2024J P M O R G A Nwww.jpmorganmarkets.comContentsCOP29: Expect finger-pointing over finance13The Swedish consumer: Help is on the way15 Global Economic Outlook Summary4Global Central Bank Watch6Economic Activity Tracking8Selected recent research from J.P. Morgan Economics10J.P. Morgan Market Watch11 Data Watches United States18 Focus: Pockets of high labor demand34Euro area35Japan41 Focus: Equity flows 44Canada45Mexico47Brazil49Argentina51Andeans53United Kingdom55Emerging Europe59South Africa63Australia and New Zealand65China, Hong Kong, and Taiwan67Korea70ASEAN72India76 Regional Data Calendars77Economic and Policy ResearchBruce Kasman(1-212) 834-5515bruce.c.kasman@jpmorgan.comJPMorgan Chase Bank NAJoseph Lupton(1-212) 834-5735joseph.p.lupton@jpmorgan.comJPMorgan Chase Bank NANora Szentivanyi(44-20) 7134-7544nora.szentivanyi@jpmorgan.comJ.P. Morgan Securities plcManaging EditorMalcolm Barr(44-20) 7134-8326malcolm.barr@jpmorgan.comJ.P. Morgan Securities plcGlobal Data Watch•Divergences are overtaking common shocks as the key cyclical driver•BoJ hold next week to set up hike in December•Mixed 3Q GDP outturns in EM Asia; hints of deceleration in 4Q•Next week: Strong US GDP and distorted jobs; global mfg. PMIThe tyranny of the commonsThe past three years have delivered unprecedented synchronization in inflation swings and central bank rate moves, despite wide growth divergences. The US stands alone in having exceeded its pre-pandemic potential pace while GDP shortfalls now exceed 2%-pts in Western Europe and China (Figure 1). Performance is more mixed elsewhere in EM but the overall group has yet to return to its pre-pandemic path. Several factors explain these gaps with the US having benefited from sustained fiscal supports. Indeed, the US federal government deficit remains high and is tracking 6.6% this year despite generating 3%ar average GDP gains over the past eight quarters (Figure 2). Gauging the importance of “global common” influences relative to widening performance gaps is a central challenge to forecasting 2025 outcomes. The IMF October World Economic Outlook reflects a bias that is pervasive among economic forecasters: an emphasis on the global common. While recognizing widening performance gaps, these forecasts see the continued unwinding of global supply shocks along with anchored inflation expectations generating a slide toward 2% inflation across the DM, which facilitates broad policy easing. We have been more skeptical of this Goldilocks scenario (even if it has been our baseline), and keenly focused on risks reflected in the persistence of sectoral and regional growth gaps. A recognition of the sustained service sector demand skewed toward the US has shifted our bias in the direction of greater regional divergence in inflation outcomes and central bank action. This week’s first important October global data release—the DM flash PMI—reinforces the message of divergence (Figure 3). Although it