What Lies Ahead for the Global Economy

McKinsey's June 2018 quarterly global scan of corporate executive sentiment continues a multi-quarter trend by moving into negative territory for the first time in over a year. As seen in the chart below, more executives expect worse economic conditions than those expecting better in the next six months. A deeper analysis shows that the mood is decidedly gloomier in Latin America than elsewhere and most upbeat in India.No doubt global executive sentiment is fueled in large measure by the current round of tariff impositions--a notorious suppressant on economic activity--ignited by U.S. President Donald Trump. Sentiment matters, especially if reality follows suit. Given the very large role psychology plays in the economy, one can't help but see the McKinsey data as a potential harbinger of the next downturn.