MacroScope

Biggest indicator of the week: China GDP

It wasn’t very long ago that economic numbers out of Asia would barely register a blip on Wall Street’s radar screen. That’s not the case anymore. Commerzbank touts Chinese gross domestic product figures due out on Friday as the most important gauge of global economic health following last week’s disappointing U.S. employment report.

Writes economist Jörg Krämer in a research note:

China’s economy has continued to slow into 2012 largely on the back of deliberate policy measures. We expect growth of 8% year-on-year in Q1, down from 8.9% in the final quarter of 2011 (consensus 8.3%), which is consistent with our call for full-year growth of 7.5% in 2012.

Fixed investment in particular has slowed recently, to its weakest year-on-year rate since 2002 and will be the primary driver of the slowdown in GDP growth. Net exports also deteriorated in the quarter, with China recording a very large trade deficit of US$31bn in February.

A report on Tuesday offered some reason for optimism. China returned to an export-led trade surplus of $5.35 billion in March, suggesting a rebound in the global economy may be lifting overseas orders just in time to compensate for a slowdown in domestic demand.

 

High-flying economic indicators

At a meeting of the National Association for Business Economics in Dallas,  discussions on the economic outlook turned so gloomy at one point that a  well-known economist was heard to say he’s inclined to sell everything and  “just buy a gun.”

Herb Kelleher, Southwest Airline’s co-founder and chairman emeritus,  offered a different view when he addressed the group on Monday. As it turns  out, although Kelleher majored in English (with a minor in philosophy), he has a favorite economic indicator too. Advance airline bookings, he said, say more about the economic outlook than is widely understood – in fact, he  said, for years the large department store companies used to call him in early  December to check on bookings so they could predict what kind of a Christmas selling season they might have. Asked what bookings look like today, he said:

I’ve been pleasantly surprised by the number of bookings and the revenue per available seat mile. What scares me is that it looks pretty good this month, but I haven’t any idea of what it looks like next month.