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How China's Slowing Economy Bleeds Into the Rest of the World

A downturn in Chinese manufacturing is causing massive slowdowns in economic growth elsewhere.

Sure, economists can point to synchronized global growth and correlations between major economies, but what are the actual linkages between major economies? 

First, let's start with the facts. 

"I can't even name a major country right now that isn't slowing appreciably -- just today {Thursday}, Germany cut its GDP estimate for 2019 from 1.8% to 1%," Daniell DiMartino, former adviser to the president of the Dallas Federal Reserve, said. If Germany's next quarter shows another economic contraction, it will officially be in recession, as its last quarter posted negative GDP growth. 

But DiMartino noted this question:

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"Can the United States live on an island, and not be affected as Caterpillar was by slowing global growth," she said. Of course, Caterpillar Inc. (CAT) - Get Caterpillar Inc. Report posted a 15% earnings miss, as global demand for its products was weak, a sign the global economy has seen its cyclical peak. 

To review Caterpillar's weak guidance and poor earnings, see RealMoney's reporting here

On linkages, here's the kicker:

"The downdraft in the Chinese manufacturing sector is what's causing Germany to go into recession, so there's direct causality there," DiMartino said. 

 Watch the full interview