Issue #12 · September 14, 2026 · Data as of 2026-09-14
Global growth: 3.1%Global inflation: 3.0%*Global equities YTD: +9.3%Median policy rate: 2.41%
* Global inflation is the median CPI across the 12 major economies (~80% of global GDP), not a single GDP-weighted index.
Global growth, inflation, and central bank divergence
Global growth is holding up, but not accelerating. Our GDP-weighted gauge reads 3.1% — the world is expanding, just not at the kind of pace that gets investors excited. The expansion is real, but it's modest.
The headline number masks significant divergence underneath. India leads the pack at 7.6% growth, while Japan brings up the rear at 0.7%. A 6.9-percentage-point gap between the fastest and slowest major economy is wide by historical standards — a sign that this cycle is playing out very differently depending on where you are in the world.
Inflation is a mixed picture globally — some economies have it under control, others are still working through it. That divergence is one reason central bank paths look so different right now.
12 major economies — ~80% of global GDP
India leads the growth table at +7.6%, while Japan is at the bottom with +0.7% — a 6.9-point spread that reflects a deeply uneven global cycle. Inflation is still running above 3.5% in 3 economies (India, Brazil, Australia), keeping their central banks cautious on the path to rate cuts. Equity markets are split: South Korea leads year-to-date at +54.9%, while India is the laggard at -12.2%.
| Economy | GDP % Actual | GDP % Forecast | CPI % | Unemp % | Curr Acct % GDP | Govt Debt % GDP | Policy Rate % | Stock YTD % | Mkt Cap % GDP |
|---|---|---|---|---|---|---|---|---|---|
| United States | +2.3† | +2.3† | 3.2† | 4.4† | -3.7† | 126† | 3.63 | +11.6 | 224 |
| China | +5.0† | +4.4† | 1.2† | 5.1† | +3.5† | 107† | 2.90† | -3.6 | 80 |
| Germany | +0.8† | +0.8† | 2.7† | 3.9† | +3.9† | 65† | 2.25 | +4.2 | 57 |
| Japan | +0.7† | +0.7† | 2.2† | 2.5† | +3.8† | 204† | 0.84† | +22.6 | 172 |
| United Kingdom | +0.8† | +0.8† | 3.2† | 5.6† | -3.4† | 104† | 0.25† | +7.0 | 97† |
| France | +0.9† | +0.9† | 1.8† | 7.9† | -0.3† | 118† | 2.25 | -0.2 | 85† |
| India | +7.6† | +6.5† | 4.7† | 4.9† | -2.0† | 83† | 5.50† | -12.2 | 267 |
| Brazil | +2.3† | +1.9† | 4.0† | 6.8† | -2.7† | 96† | 14.39† | +16.6 | 38 |
| Canada | +1.5† | +1.5† | 2.5† | 6.5† | -0.2† | 111† | 2.27† | +12.0 | 199 |
| Australia | +2.0† | +2.0† | 4.0† | 4.2† | -2.3† | 51† | 4.35† | +0.1 | 114 |
| South Korea | N/A | N/A | N/A | N/A | N/A | N/A | 2.54† | +54.9 | 147 |
| Italy | N/A | N/A | N/A | N/A | N/A | N/A | 2.25 | +15.7 | 27† |
| Economy | GDP % Actual | GDP % Forecast | CPI % | Unemp % | Curr Acct % GDP | Govt Debt % GDP | Policy Rate % | Stock YTD % | Mkt Cap % GDP |
|---|---|---|---|---|---|---|---|---|---|
| Mexico | +0.6† | +1.6 | 3.9† | 2.7† | -0.4 | 63 | N/A | N/A | 31 |
| Indonesia | +5.1† | +5.0 | 3.0† | 4.8† | -1.1 | 42 | N/A | N/A | 66 |
| Turkey | +3.6† | +3.4 | 28.6† | 8.3† | -2.8 | 26 | N/A | N/A | 25 |
| South Africa | +1.1† | +1.0 | 3.9† | 32.5† | -0.9 | 79 | N/A | N/A | 327 |
| Poland | +3.6† | +3.3 | 3.3† | 3.4† | -1.1 | 66 | N/A | N/A | 31 |
| Thailand | +2.4† | +1.5 | 0.9† | 1.0† | +0.7 | 67 | N/A | N/A | 89 |
| Saudi Arabia | +4.5† | +3.1 | 2.3† | 3.5† | -1.6 | 32 | N/A | N/A | 185 |
| Taiwan | +8.7† | +5.2 | 1.5† | 3.4† | +18.1 | 28 | N/A | N/A | N/A |
| Economy | GDP % Actual | GDP % Forecast | CPI % | Unemp % | Curr Acct % GDP | Govt Debt % GDP | Policy Rate % | Stock YTD % | Mkt Cap % GDP |
|---|---|---|---|---|---|---|---|---|---|
| Nigeria | +4.0† | +4.1 | 16.0† | 22.6† | +5.8 | 32 | N/A | N/A | 30 |
| Vietnam | +8.0† | +7.1 | 4.9† | 2.1† | +5.3 | 30 | N/A | N/A | 61 |
| Bangladesh | +3.5† | +4.7 | 9.2† | N/A | -0.6 | 42 | N/A | N/A | 6 |
| Kenya | +4.9† | +4.5 | 5.9† | N/A | -4.1 | 72 | N/A | N/A | 17 |
| Egypt | +4.4† | +4.2 | 13.2† | 7.4† | -4.2 | 87 | N/A | N/A | 17 |
| Pakistan | +3.1† | +3.6 | 7.2† | 6.9† | -0.4 | 70 | N/A | N/A | 17 |
24 of 26 economies have full GDP data this issue. A † marks a figure older than that basket’s freshness window (windows widen for Emerging Markets and Developing, which report on a longer lag); N/A means not reported. Sources: FRED · OECD SDMX · IMF WEO.
Rotating spotlight — this week: Italy
Italy: the central bank's policy rate is 2.25%. The local stock market has gained 15.7% this year.
A permanent fixture — the US as the world's largest economy and key driver of global financial conditions
Right now the yield curve is not inverted — 10-year Treasury yields sit +0.39% above 2-year yields, which is the normal, healthy relationship. When this gap turns negative (inversion), it's often a sign that investors expect the economy to slow. The gap between long- and short-term rates narrowed by 2 basis points this week (one basis point = 0.01%) — a cautionary sign, meaning the curve is moving closer to inversion territory.
Our recession model puts the odds of a US recession starting within the next 12 months at 19.0%. To put that in context: moderate — worth watching, but not yet alarming. The model works by looking at the gap between 10-year and 3-month Treasury yields (currently +0.95%) — the wider that gap, the lower the recession risk. The probability moved down 0.7 percentage points from last month. One caveat worth keeping in mind: this model was originally calibrated on US data from 1960 to 1994. The post-2008 era of central bank bond-buying and forward guidance changed how the yield curve connects to the real economy — the 2022–23 inversion, for instance, lasted far longer than the historical model would have predicted without triggering a recession. Treat the figure as a useful reference point, not a precise forecast.
Inflation is currently Normal. “Normal” here is a specific, model-defined thing: CPI is within half a standard deviation of its own 20-year rolling average. One caveat that matters for reading this: the trailing 20-year window now includes the 2021–2023 inflation surge, which pulled that average up and widened the range the model treats as “normal.” Right now it is actually sitting modestly above that 20-year average — about +0.42 standard deviations — so “normal” here means normal by recent historical standards, not back at the Fed’s 2% target. The practical takeaway: price growth is no longer alarming and gives the Fed room to move rates in either direction, but it has not fully returned to the 2% goal — a stable backdrop, not an all-clear.
Our Financial Conditions Gauge reads Risk-On (+0.33 on a −1 to +1 scale). It combines three signals: high-yield credit spreads (do investors trust risky borrowers?), real interest rates (the interest rate after you subtract inflation), and the yield curve shape (is the bond market worried about a slowdown?). All three inputs are pointing in a healthy direction: junk bond spreads are tight (investors aren't demanding a big premium to hold risky corporate debt), real interest rates are supportive, and the yield curve isn't sending stress signals. Historically, conditions like these have been favorable for stocks and other risk assets.
Taken together, the signals point to a relatively benign macro environment. Recession risk is low, inflation is not a major headwind, and the risk gauge is not flashing red. That doesn't mean markets can't fall — they can, for all kinds of reasons — but the systematic macro backdrop isn't screaming danger.
All figures are model outputs based on public data — not investment advice.
What global economic leaders are saying this week