Global economy: The darkness returns

BOSTON — Remember those dark days of 2008 and 2009? When doom and gloom were the norm? When economic catastrophe seemed imminent? When hope turned to fear, and then fear turned to panic?

Well, folks, if you haven't been closely following events recently then I've got some bad news for you: It sure looks like we're headed for more dark times. And fast.

From the world's largest economy (the US), to the world's largest economic bloc (the European Union), to the world's fastest-growing major economy (China) to a former high-flyer (India), the world is a mess right now.

So let's steel ourselves, and take a closer look at the damage:

The biggest economic report in the world's biggest economy landed with a thud Friday.

The US added only 69,000 jobs in May — the third straight month of anemic job growth. The US unemployment rate, meanwhile, ticked up to 8.2 percent, from 8.1 percent in April.

The jobs number is so important, of course, because people don't spend money if they don't have money. And consumer spending makes up about two-thirds of the giant US economy. So no jobs, no money, no spending, no growth.

And that, in turn, puts pressure on company executives, who cut costs by — you guessed it — eliminating jobs or by not hiring more people.

So down and down we go, cycling ever deeper into a loop of doom.

“In February or March, I thought the labor market had achieved escape velocity,” Patrick J. O’Keefe, the director of economic research at J. H. Cohn, said in the New York Times. “It appears to me now that that was a premature call.”

This latest report will no doubt play loudly in the ongoing race for the White House, and is likely to sharpen the campaign to the single issue of fixing the US economy.

But, of course, there's very little that any president can do about the rest of the world, and again, if you look outside the US things are just as bad, or worse.

Europe — the world's largest economic bloc with a combined annual gross domestic product of some $17 trillion — is in the midst of a serious economic decline triggered by the ongoing, and worsening, euro crisis.

We also learned today that unemployment in the 17-nation euro zone hit 11 percent in March and April, a record high.

This is, of course, tragic for the jobless masses in Spain, where the unemployment rate currently tops 20 percent. It is also very bad news for struggling people in Italy, Greece, Ireland, France and elsewhere across Europe. And it complicates the gargantuan political problems now facing German Chancellor Angela Merkel, new French President Francois Holland, and the rest of the EU's beleaguered leaders.

But Europe's woes don't stop at its borders.

US companies need that giant market, too. So do China's many exporters. Countries across eastern and central Europe are economically tied to the EU. And, of course, there are the banking problems associated with Europe's troubles, as the bottom lines of financial institutions worldwide are intimately connected with what eventually plays out there.

To make matters worse, China and India, which many economists hoped could help offset economic weakness in the US and Europe, are both showing signs of serious trouble.

As GlobalPost's senior correspondent in Hong Kong Ben Carlson reported this week, China is sputtering on almost every count:

"The first five months of 2012 have seen a parade of uncharacteristically iffy economic data out of China. First quarter GDP growth was 8.1 percent, a three-year low. Electricity output slipped. Bank lending slowed. Retail luxury sales dropped. The manufacturing index hit its seventh straight month of contraction in May. And that’s not even counting the doldrums from Europe that are likely contributing to China's economic troubles."

Beijing is now mulling a $315 billion stimulus package to stave off the slowdown, but "capitalism with Chinese characteristics" is clearly showing strains.

So, too, is the other economic wunderkind of the past decade.

As GlobalPost's senior correspondent in India Jason Overdorf has been reporting non-stop in his excellent On India blog, India is also in big trouble — from a shocking drop in GDP, to a rapidly sinking rupee, to rising political unrest.

And let's not forget economic powerhouse Japan, which is growing but still struggling with the economic damage caused by last year's devastating earthquake, tsunami and nuclear disaster at Fukushima.

Then, of course, there are the serious strategic problems now facing the world, each of which has the potential to trigger even more economic damage, such as the escalating conflict in Syria, political confusion and uncertainty in Egypt, simmering anger and frustration in the Palestinian Territories and Israel, to say nothing of the ongoing wars in Afghanistan and Iraq, potential war with Iran and the ever-dangerous situation in a rapidly-deteriorating North Korea.

So where's the good news?

At least it's Friday.

Thomas Mucha is GlobalPost's Editor and chief business and economics columnist.