G7 plus E7 six-month real narrow money growth – the key longer-range forecasting indicator employed here – fell further in April, based on data for 11 of the 14 components. Allowing for the typical half-year lead, this suggests that the global economy will continue to slow through October – see first chart.
The six-month change remains respectable – 1.6% or 3.3% annualised – so real money has yet to warn of a recession. A further decline, however, would be worrying.
The hope is that policy easing will lift nominal money growth outside the US, although yesterday’s Eurozone numbers were disappointing. Real money expansion should be supported over the summer by a slowdown in inflation in response to recent falls in oil and other commodity prices – second chart.