While financial doomsayers – especially those paid by the major media networks like MSNBC and Fox News – have been saying for some time that the global economy could fall into an unrecoverable black hole, so far the world has plodded on. However, when you start to look at the numbers, you can see that the anemic growth that has characterized the last several years is starting to erode.
Take the estimates from the International Monetary Fund (IMF), for example. According to Reuters, in July, the IMF predicted a final 2012 growth rate of approximately 3.5 percent. Roughly three months later, this is down to 3.3 percent. Similarly, 2013 numbers were revised from 3.9 percent to 3.6 percent. When asked about the justifications for the alterations, IMF head economist Olivier Blanchard told the source that uncertainty was the primary cause.
"Worries about the ability of European policymakers to control the euro crisis and worries about the failure to date of U.S. policymakers to agree on a fiscal plan surely play an important role, but one that is hard to nail down," Blanchard told Reuters.
Translation: we don't know what's going to happen. In terms of financial rescue, the only large steps that have been taken thus far include the Federal Reserve's latest and now seemingly open-ended quantitative easing program and the European Central Bank's Outright Monetary Transactions (OMT) facility. Effectively, both programs open the spigots for financial stimulus but as of now only the U.S. central bank has taken an active role in using its funding powers.
Major U.S. businesses don't seem too happy about the state of the global economy either, and neither do their customers. Google missed its third quarter earnings forecast by roughly $500 million, while Motorola lost $527 million during the same time. Even consumer tech giant Apple is taking blows, having missed its income target by more than $3 billion.
With the world in this troubled financial state, it would make sense for investors to be more pragmatic about where and how they put their money to work. One asset class that has traditionally performed well is cash flow real estate, as demand for housing will always outweigh demand for iPads. Those in the industry should check out GreatWealthStrategies.com to learn more about how owning rental properties can protect their wealth from economic turbulence.