Countless investors have respected George Soros for his investment knowledge for at least a few decades. Therefore, when he says that the current economy is echoing that of what preceded the 2008 recession, investors pay attention. After hearing Soros’ latest warnings, individuals and businesses are probably questioning what this means for them.
Mainstream forecasters are not yet declaring another recession. However, January 7, 2015 was the worst day for stock market investors in three months. As reported on this day, the Dow Jones Industrial Average plummeted by more than 390 points, and the main economic dip seems to be occurring within Chinese trade markets. In fact, investors have made mention of economic turmoil in trading for the second time in a week in China.
The fact that China, the world’s second largest superpower, is suffering economically could be one of the reasons for Soros’ latest predictions about a repeat of 2008. However, some economists say it is too early to tell. At the same time, other economic problems suggest that there could be a recession on the horizon.
For instance, the manufacturing sector in the United States seems to be suffering. The current ISM indicator is about 48.2, which is about two points below the level it should be. This in and of itself does not indicate a recession, but if the ISM indicator drops below 45, this could be cause for concern. Furthermore, it is said that global trade is taking place at a slower rate than in the past.
George Soros focused specifically on China in some of his latest predictions, however. One of the hugest concerns right now is that this country’s debt-to-GDP ratio has risen by 50 percent in the past four years. How China handles their current economic issues could play a part in what happens in the rest of the world.
As far as the service industries are concerned, they seem to be more robust than the manufacturing sectors. According to recent ADP reports, the service industry ISM measured at a 55.3 in December. Furthermore, there is evidence of increasing employment within the service fields.
Although global economic growth seems sluggish, it does not seem likely that a recession will happen. However, certain triggers such as a possible war between Saudi Arabia and Iran could set the economy into a downward spiral. Only time will tell, and many people are currently keeping watch. George Soros provides his wisdom based on his four decades’ worth of investment and financial experience.