Is the global economy shifting gears—or grinding them?
After the Great Recession, high growth rates in the BRIC countries kept the global economy limping forward while the developed markets struggled to recover. But the last six months or so have seen a remarkable regime change. The US dollar—long expected to decline due to the Federal Reserve’s aggressive money-creation policies—has instead strengthened sharply, thanks to a relatively peppy US economy. Meanwhile, China has slowed, as has its appetite for the raw materials from nations such as Russia and Brazil. The outcome? Just look at the oil markets, where prices have collapsed roughly 50% over the last six months.
The US isn’t the only place enjoying unexpected growth. Now that the European Central Bank has embarked on its own money-printing program, indicators in the euro zone are looking better than they have in years. Retail sales have surged. Sentiment is rebounding. Stock markets in Italy and Germany are both up more than 20% this year, as the weakening euro gives continental exporters a lift.
Still, there are likely to be nervous moments ahead. In Brazil, the weak real is making inflation surge and adding to widespread political discontent. Russian retail sales are in free-fall after a ruble collapse severely crimped purchasing power. China, in a bid to bolster growth, is going back to its old reliance on exports; these have risen to fresh highs (paywall), likely inflaming tensions with the US over the cheap yuan. And the Fed this week gave the dollar a downward nudge by highlighting its concern over weak US exports.
And the IMF expects the global economy to expand by 3.5% this year, scarcely up from 3.3% in 2014. For all the risks central banks and governments are taking, that’s not much reward.—Matt Phillips
Five things on Quartz we especially liked
The space suit of the future is being designed in Brooklyn. The issue of what to wear on your trip to space is more pressing than ever as private companies prepare to launch flights. Tim Fernholz presents a brief history of astronaut fashion with an inside look at Final Frontier Design, the Brooklyn atelier where an engineer-artist duo are developing “the most extreme wearable technology in existence.”
If you get a raise this year, thank a politician. The flip side to Adam Smith’s “invisible hand” is the “visible” one, a.k.a. the government. And governments are increasingly using it to bump up wages, writes Matt Phillips—”a serious swing of the pendulum away from the laissez-faire consensus that has dominated economics since the era of Ronald Reagan and Margaret Thatcher.”
Starbucks wants customers to talk about race, but maybe it needs to talk to itself first. The backlash to the company’s #RaceTogether campaign in the US was swift, as summarized by Hanna Kozlowska. It was also understandable. As Melvin Backman and Zach Wener-Fligner showed with data, where Starbucks puts its cafés is, for the most part, where the white people are. And Morgan Jerkins asks, does CEO Howard Schultz have a white-savior complex?
Decoding the emoji-filled language of Venmo transactions. In what may be the first ever quantitative analysis of economic trends through these little cartoon shapes, Wener-Fligner sorted through a week’s worth of data from the mobile payments app to find that weekend transactions are dominated by the emoji for pizza, wine, and beer.
The surprising power of Buzzfeed India. The site’s humour is tasteless, but the irreverence with which its pokes fun at serious issues makes it look positively fearless among India’s subdued press. Buzzfeed can get away with this, writes Leo Mirani, because it has nothing to lose and no plans to make money in India (for now).
Five things elsewhere that made us smarter
Does the new Cairo stand a chance? A proposed new Egyptian capital, east of the existing one, will be about as big as Singapore, have a park twice the size of New York’s Central Park, be home to 5 million people in 21 residential districts, and cost some $45 billion. Or it may become a massive ghost town, if it’s ever built in the first place. Patrick Kingsley in the Guardian weighs up its chances.
Exploring Seoul’s “improvement quarter.” The New Yorker’s Patricia Marx spent two weeks immersed in the epicenter of South Korea’s plastic surgery obsession, where between 400 and 500 clinics and hospitals are packed into a single square mile. Marx consulted surgeons, students, academics, a reality show producer, and a “face reader” about the paramount importance of a “perfect” appearance, and just how far people go to attain it.
Inoculate yourself against bad science writing. A recent article in the New York Times piece suggested that wearable computers could give you cancer. (The editors have since walked back the article.) Nick Stockton at Wired dissects how it used suggestions, half-truths and partial evidence to construct a misleading picture, and argues that such writing fuels public misunderstanding of science.
Making sense of near-death experiences. Many people come back from brushes with death convinced that they had a sojourn in the afterlife. In the Atlantic, Quartz’s own Gideon Lichfield looks at why their beliefs are so strong and relates some of the attempts to scientifically probe what is happening at the boundary between life and death.
The coolest yield curve ever. You may not even know what a yield curve is, much less think it possible to be excited by one. But trust us—these 3-D interactive curves from the New York Times’ Upshot will make you understand sovereign debt and the economic fate of nations in a way you never did before.
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