Chart of the day: Correlation of largest economies’ GDP since 2001

John Hussman’s latest weekly letter contained a very nice chart on the trend for GDP growth in the largest developed economies. The data show a high degree of correlation for trend growth over the past ten years.

Hussman uses this chart to support his outlier view that the US will follow Europe into recession this month or next. He believes like the ECRI that months from now we will look back to today and realise that growth in the US had weakened so materially that a new recession dated around now had begun. While I acknowledge the correlation and see the global growth slowdown that (according to Hussman’s own charts) began in 2010 gaining steam, I am not in the recession now camp.

Source: The Reality of the Situation – John Hussman, Hussman Funds