This Just In
  • Corporate Solutions says combining the SIA Snow Show & Emerald’s Outdoor Retailer will grow the event and entire outdoor sports industry.
  • Corporate Solutions advised SIA in the blockbuster sale. The firm is predicting more exhibition industry deals in the coming months.
  • Emerald Expositions is the new owner of the SIA Snow Show. The Gold 100 show will be merged with Emerald’s Outdoor Retailer.
  • The combined show will be called Outdoor Retailer + Snow Show and is expected to debut in Denver in January 2018.
  • The event marketing firm mdg is opening an office in Chicago. It is the company’s fourth office nationwide and will serve the Midwest market
  • Marketing executive Leana Salamah joins mdg to run the office, which opens June 1. Key staff include event and marketing specialists.
  • Spargo and Britain’s Far Horizons Tourism are partnering in a new housing-management company serving cross-border meetings and events.
  • The new venture is GCA Global Congress Accommodations and will work with show organizers worldwide thorough offices in Europe and the U.S.

An Interconnected World with Interconnected Challenges and Opportunities

Darlene Gudea
, Publisher
October 1, 2015



Oceanside, CA – Global developments in recent days and weeks further underscored how highly connected and interdependent the global economy is today. “What started as a seemingly reasonable decision to unpeg the Chinese yuan from the dollar, and let it be subject to market forces, has ignited a firestorm,” said Frank Chow, chief economist, Trade Show Executive Media Group. “Equity markets plummeted worldwide and oil prices spiraled downward.”

As we go to press in late September, The Chinese markets have since crashed over 40% from their apex, causing a domino effect globally, Chow said. Skeptics took another look at China’s economy and realized it was unraveling more profoundly than reported. Europe’s modest recovery is tottering on the edge of sliding back into recession. Except for India, the BRICS countries — Brazil, Russia, India, China and South Africa — are in trouble. Japan is struggling with its GDP contracting in Q2. Canada just entered into a recession. “What has become painfully obvious is that the world has not yet come close to fully recovering from the Great Recession,” Chow said.

Meanwhile, the U.S. has been stuck at a 2.2% annual GDP growth rate since the Great Recession. August payroll jobs gained 173,000, way below the average growth of 243,000 in the past 12 months, but will likely be revised up. The unemployment rate did drop to 5.1%, as labor force participation remained steady and wages increased a tad. But cracks are starting to appear in manufacturing as the ISM index fell to 51.1% in August, the lowest reading since May 2013, with new orders and exports slowing. Also, producer prices and wholesale inventories have tapered off. University of Michigan’s consumer sentiment plunged from 91.9 to 85.7 in September. “Despite these issues, the U.S. is still widely considered the healthiest developed economy in the world along with Germany,” said Chow. But Germany’s economy could be in for a shock. German and other European nations are weighing the economic, political and ethical ramifications of opening their borders to the millions of Syrian refugees desperately trying to escape regional violence.

Given this economic backdrop, will China and the rest of the world drag the U.S. into a recession or is the U.S. strong enough to sustain the rest of the world until they can kick start themselves out of their malaise?  Beijing is considering an infusion of a trillion yuan ($160 billion) over the next three years. The European Central Bank is already conducting 60 billion euros a month in quantitative easing (QE). Japan’s Prime Minister Abe plans to reduce the corporate tax rate by at least 3.3 percentage points over two years.

Whether these efforts succeed remain to be seen, as the Federal Reserve (Fed) has had mixed results with QE so far, said Chow. Here is what we can expect for the U.S. economy in the next six months:

  • Further decline in oil prices when Iran resumes oil production. due to sanctions lifting from the Iran nuclear treaty.
  • Potential government shutdown over federal funding of Planned Parenthood.
  • Higher taxes and more business regulation starting in 2016.
  • Lower import prices and lower exports due to the rising U.S. dollar.
  • More market volatility until the Fed rate policy becomes much clearer.

Chow believes the U.S. economy is not dependent on other nations to grow — it’s a consumer-based economy. He draws upon the analogy that once our economy is moving, it is like a powerful ship that can only slow down gradually. It takes a lot to change course.

“The most recent U.S. recession was self-inflicted, caused by a monumental collapse of the U.S. housing industry, and was greatly exacerbated throughout the globe by American financial institutions,” Chow pointed out. He said the last recession — caused by external forces — was the oil embargo of 1973. In the 911-terror event, the U.S. was already in recession. “So, I don’t see anything of that magnitude yet, unless the U.S. markets crater by greater than 50%,” he said.

To provide a different perspective, Citi’s global research team warns the Chinese economy will likely lead the world into recession by mid-2016. They give a 55% chance of a moderate global recession that will last for most of 2017. Citi estimates China is actually growing at 4% rather than the official 7% figure. The projected collapse will initially be concentrated in emerging markets. “Although I’m doubtful this will transpire, there are nevertheless other powerful forces on the horizon that may alter my perspective — global deflation, aging populations, and mass migration from war-torn regions,” Chow said.

Many countries have reported slumping or persistently low inflation rates this year, causing worry among central bankers. The Organization for Economic Cooperation and Development (OECD) reported the annual rate of inflation in its 34 members was unchanged at 0.6% in June, well below the 2.0% regarded as healthy economic growth. The OECD’s numbers indicate the wave of stimulus around the world has yet to minimize the risk of a slide into deflation or to enhance economic recovery.

Global aging is a subject we covered last year, and it has huge economic implications, Chow said. “This force is inevitable, and if not addressed quickly enough, it will become tragically deflationary,” he said. United Nations demographic data has recently highlighted that Europe, China, Brazil and Japan will soon start a trek where 50% of its population will be at least 65 years of age when compared to the working age population. The U.S. is not far behind.

Finally, the explosion of migrants into Europe will certainly cause economic disruptions short-term, but may be productive if migrants can be peacefully assimilated into a workforce that is in great need of younger workers.

The world is changing rapidly. As these emerging trends evolve, we will discuss them in future columns to assist our readers in navigating an even more uncertain economy.