The global economy is on a knife-edge

THE GLOBAL economic mood has taken to whipsawing between gloom and optimism. It can be hard to keep pace. This newspaper warned readers to prepare for “the next recession” in 2015 and 2018, pausing in 2017 to hail “the world economy’s surprising rise”. Lately, the periods of alarm and alacrity seem to have shortened. Markets began 2019 on the rebound and then took fright—only to surge in recent weeks. It is tempting to see the swings as mistaken attempts to find narratives in noise. But they have been accompanied by very real economic wobbles. Trade growth slumped in 2015, rebounded and is now decelerating. Global output, as reflected in measures of purchasing managers’ activity, bounced along with market gyrations, sinking in 2015 and lurching upward in 2017 before falling this year to levels not seen since the depths of the euro-area crisis. Rather than noise, the mood swings reflect investors’ attempts to work out which of two very different equilibria an unsettled global economy will land on.