What if the US double dips?

- Global: What if the US double dips? "While an outright recession seems unlikely, the US appears to be sliding toward a “growth recession.” We think the global economy is more resilient to shocks from the US, but decoupling is unlikely."
- United States: One is the loneliest number "With two-consecutive quarters with a one-handle, the US is dangerously close to a “growth recession.” Structural unemployment has increased but most of the rise in unemployment is cyclical."
- Canada: Bank's rule to rule "The Bank’s own policy rule suggests rates are at emergency levels, ie, too low, and at least one more 25bp hike is in the cards in September."
- Euro area: Germany’s interlinked recovery "Growth remains heavily export oriented – slower growth elsewhere in the global economy could have a notable impact on Germany, and in turn many other Eurozone economies."
- UK: The unwinding (or not) of imbalances "Some of the imbalances in the UK economy have ameliorated in recent quarters. But in part, that has come at the cost of exacerbating others."
- Japan: Strong yen starts to take visible toll "Yen appreciation has started to constrain exports in value terms through falling prices, as evident in the steep drop in export prices to the EU."
- Australia: Take me to your leaders "Take me to your leaders. No, not Abbott and Gillard trying to put together a minority government, but wilting leading economic index."
- Emerging Asia: India’s BoP "India’s balance of payments risks are overdone, in our opinion. To us, a la August 2006 and October 2008, apocalyptic concerns about the current account deficit appear to be a bundle of internal contradictions."
- Emerging EMEA: EEMEA rates about to turn? "Are EEMEA rates about to turn? We don’t think so. We also show that in previous cycles rates only started to rise 50-100D before the first rate hike."
- Latin America: What’s going on with domestic demand? "During past Mexico ecessions, recovery dynamics have been pretty similar: initially led by external demand through the rebound of the manufacturing sector, and then gradually spreading to other large sectors of the economy."

Merrill Lynch Global Economic Weekly 20100827

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