The most important piece of economic data for U.S. investors in the week ahead won’t come from the U.S. And it is expected to be released before the trading week even begins on Wall Street.
The economic slowdown in China has reverberated across the globe. The U.S. stock sell-off in August was triggered in part by a bigger drop in China’s stock market. The Chinese government has devalued its currency hoping to goose Chinese exports. (It didn’t work.) The People’s Bank of China has cut interest rates trying to spark more spending. (Imports into China continue falling.) The government has poured billions of dollars into stock brokerages with the goal of stabilizing the stock market. (It has helped, for now.)
Don’t think the Chinese economy is shrinking. It’s not. However, it isn’t growing as fast as it had been nor has fast as expected. When the central government releases its third quarter gross domestic product figures before the U.S. stock market opens Monday, it’s expected the Chinese economy grew at its slowest annual rate since the Great Recession hit the U.S. and Europe.
For investors, it will be important to remember China is not the U.S. Even with a couple of decades of feverish growth, the Chinese economy is barely half the size of America’s. However, while China’s economic challenges are its doings, the worry they generate is exported around the world.
Financial journalist Tom Hudson hosts The Sunshine Economy on WLRN-FM in Miami. Follow him on Twitter @HudsonsView.