Although the global economy is slowing, there are certain bright spots in Mexico, with natural resources booming and the Mexico economy stabilizing, as well as immigration north slowing, the future could be bright in Mexico.
Guillermo Barba recently interviewed Mish for Forbes Mexico in a revealing interview. The interview can be read in spanish at Forbes Mexico.
In the interview, Shedlock makes clear his dire view of the global economy, but reserves such a negative assessment of Mexico.
The Atlanta Fed GDPNow Model now suggests 1.1% annualized growth. Should consumer spending falter, and I believe spending will falter, the GDPNow forecast will be on the high side. Even if the GDPNow model is accurate, we are talking first half GDP of 0.3% or so, well below the stall speed.
On June 4th we learned Nonfarm Productivity Collapsed Greater Than Expected 3.1%, Unit Labor Costs Rose 6.7%. That is not good for hiring prospects. On June 2, the US Census Report showed Factory Orders Down 8th Time in 9 Months; Durable Goods Inventories Highest Since 1992. Economists say this is transitory, but they have been saying that for nine months!
The poor economic situation in China, the Euro Zone, Japan and the US could bring more trouble for the global economy.
“The global economy is clearly slowing led by Asia and the US,” according to Shedlock. “Europe has seen some improvement recently, but it’s based on the beggar-thy-neighbor tactics of QE. For a while, nearly a third of European government bonds traded with negative yields. This is outright lunacy in any market, and even more so if one buys into the recovery thesis. ”
But it is not all negative for Mexico:
“One positive aspect for Mexico is the in-sourcing and near-sourcing trend in US manufacturing, from China,” the registered investment advisor believes. “However, even if manufacturing returns to the North American continent, the jobs will not come with it thanks to robotics.”
At MexResorts, we have written about Hugo Salinas Price and his efforts to re-monetize silver, a development Shedlock has been watchin. In the same post, we mentioned that China and Mexico are forging closer ties, which makes sense considering Mexico’s silver mining prospects and China’s deep interest in precious metals as part of their overall economic policy.
“Mexico’s Hugo Salinas Price is well out in front on this issue. He wants to bring “honest money” back to Mexico. In December of 2014, Hugo penned A Silver Coin that is Money To Calm the National Tantrum in Mexico. It’s an idea well worth considering,” Shedlock believes.
Although there are signs that Mexico’s economy is slowing, others wonder if that regions in Mexico, in particular the border, region, could represent the next economic powerhouse. As Yucatan Times writes:
Mexico is becoming a vibrant middle-class nation. Already, it is the largest trading partner of California, Texas and Arizona, and is responsible for hundreds of thousands of jobs across the Southwest.
And that might be just the beginning. With economic and educational reforms underway, Mexico’s rise could accelerate. By one estimate, Mexico will be the world’s fifth largest economy by 2050.
As Michael Lind writes, The Rio Grande region has spawned a revolution in oil and gas production which has been enabled by hydraulic fracturing. Durango, Chihuahua, Coahuila, Nuevo Leon, and Tamaulipas enjoy a per capita GDP 2.3 times higher than the rest of the country, with Mexico’s middle class having grown to comprise 40 percent of the population. Immigration to the US is declining, also, out of Mexico, hinting at a stabilizing economy.