Landing padded: the global-recession risk

The Economist. Hello and welcome to The Intelligence from The Economist. I'm your host, Jason Palmer. Every weekday, we provide a fresh perspective on the events shaping your world. Last week, in our first piece about dating apps, we said the big incumbents are struggling to keep their numbers up. In today's second installment, we look at what people are doing instead of just swiping and paying. And in Britain, it's called fell running. Elsewhere, hill running. Racing up steep inclines with the sure-footedness of a mountain goat. Our obituaries editor remembers the king of the fells, Joss Naylor, who set record after record. First up, though, a look around world markets at the moment reveals some buoyant moods. Good news out of Wall Street yesterday spilled into Asian markets this morning, all on the back of healthy American unemployment and retail sales data. It's all a very different story from the absolute rout of 2 weeks ago, in turn sparked by bad jobless numbers in America. Investors, traders, economists, the public, everybody's a bit edgy recently because of a fear that's been lingering around for a while, that of global recession. Well, today, dear listener, a positive news story. We think you can relax a little.

In recent weeks, the inflation numbers, both in the US and in other rich countries, have definitely been going in the right direction.

Colin Williams is our senior economics writer.

There were some fears early on in 2024 that inflation was rearing its head again, but those fears have kind of faded away. So that's good. However, there are now growing fears among lots of economists and investors that the US economy and by extension the rest of the rich world may be falling into recession. And that was basically sparked by a jobs report a few weeks ago, which showed that US unemployment was rising and that job growth was slowing. But our view, looking at the inflation data, looking at the jobs data, looking at the output data, both in the US and elsewhere, is that the global economy actually is not really in danger.

So let's talk first about the American jobs figures and how that played into the fears that were around.

US jobs growth has been slowing for some time. We're long past the period in 2021 and 2022 where there were huge jobs numbers. What people are kind of worried about is that it's nearing the point where jobs growth is static. It was about 100,000 a month in the latest jobs report, which is historically not very strong. I think more importantly though is that unemployment has been going up. So it hit a low of 3.4%, which is really very low, in April of last year. It's now at 4.3%. So that is normally associated with a recession, to be honest, if you look over the long history. And that is what has worried people. I'm less concerned about this really for two reasons. Basically, the the business cycle after COVID has been very weird. Lots of things have been moving in strange directions, and I think the historical rules of the past are not very useful now. Just look at the unemployment question, for example. Yes, it's gone up from 3.4% to 4.3%. Not good. However, I think we have to bear in mind that there's two things that will be affecting those figures. One is the massive labor shortages that really have only recently disappeared. A few months ago, employers would really take anyone they could because labor shortages were so bad, and that pushed down the unemployment rate. That's now kind of faded, so it's in a way not surprising unemployment's gone up a bit. And then the second thing is that we're seeing more people enter the workforce. Now, that's actually a good thing, actually shows economic strength. In the short run, it can lead to unemployment going up because people who had previously said there's no point looking for work are now saying, actually, I think there is a point looking for work. I'm going to register as unemployed and and look for work. So in the short run, that can raise the unemployment rate. If we actually look at jobs growth across the rich world, it's been pretty strong. There's one or two exceptions. Japan is one, but really everywhere else, jobs growth is pretty strong.

And what about other measures of, of output or of incomes?

Well, here I think the story is much clearer. There's really no evidence of weakness here whatsoever. So for example, look at corporate profits, which is a very important part of GDP. American companies' earnings look set to have grown by about 10% year on year in the second quarter of this year. It's a similar story when you look at corporations in other rich countries. Corporate earnings are doing pretty well, which is actually a pretty good sign. They would normally plunge in a typical recession. And then if you look at other measures, so there's lots of other high-frequency indicators that we look at. There's one called the PMI, which is, uh, a lot of people look at. That's looking pretty good. And then other real-time measures of GDP, again, are pretty strong. You just don't really see much evidence of a slowdown whatsoever.

And completing the set of reasons not to worry, the inflation numbers are looking pretty good too.

Yeah. So bear in mind that the point of central banks raising rates over the past few years has been to reduce inflation. That's why they've done it. Inflation in late 2022 in the rich world on average was about 10%. That's really high. It's now come down really quite a long way. So in June, the median OECD country had inflation of 2.6%, which is pretty close to most central banks' targets, which is 2%, when in fact about a quarter of countries are now at 2% or below. So in that sense, actually things are going pretty well.

That all sounds like sensible numbers, but there is also the psychological end of this, namely the rollercoaster ride on global stock markets earlier this month. What's your view on how that figures in here?

I guess the first thing to say is no one knows really what causes stock markets to move up and down, particularly over short periods. So with that said, I would say there are two things that have happened. One is like a technical thing. There have been certain changes to interest rates in various countries that have resulted in money moving one country to another, which I think you can make the case has resulted in some stock markets being hit. That's the first thing. Then the second thing is more of a sociological thing. People have been worried about this recession for a long time, really since 2022, and it hasn't come, but people have been worried about it. And so there's a sort of sense that whenever there's any bad news whatsoever, people react very strongly, the markets react very strongly. I think there's pretty good evidence of that, but I wouldn't read that as evidence of there being a well-formed view of a recession on the way. It's more like people kind of are very prone to panic at the moment.

And earlier you mentioned that some of the dynamic that's going on here is a switch around of the rules since COVID or because of COVID Is that just waiting for that all to ring down and to get back to business as usual, or has business as usual, the way people think about this stuff, changed permanently, do you think?

I think the way to think about it is that COVID, for various reasons, has upset a lot of the rules of thumb that people use to understand the economy. It's really messed up a lot of the data as well. And so when people are looking for patterns, which is really what economists do when they're talking about the question of is the economy falling into recession, they will rely on patterns that no longer really hold true. And that has been the case now for 2 years. But people, I think because it's easy and people want to look smart, will reach for these shorthands and don't really take a step back and say, Okay, but what's the picture in the round? Is the economy really slowing? No. It's easier to point to these various rules and say, well, if the unemployment rate goes up by 0.5%, that means almost by definition a recession is coming. So that's how I would think about it.

You've still sort of described the situation in this difficult middle period. Long run, do you think those little shorthand ways, those rules of thumb and so on are gone, or we're just waiting for them to return?

I think probably they will return. The thing to just remember is that the economy was shaken both in a massive downward direction and then in a massive upward direction as a result of the lockdowns and then the release of the lockdowns. And what we've had since then is a series of aftershocks which are getting smaller and smaller over time. So I think, yes, within a few years it's probably the case that these rules of thumb will actually start to be useful again. But there's a useful idea that's going around among, I think, some of the better analysts at the moment, where the business cycle that we have at the moment is in some sense fake, which sounds quite strong, but I think actually gets at one of these important truths, which is if you turn an economy off and then turn it on again, it's not that surprising that a lot of the rules that people use to understand the economy might no longer be true. I think that will change eventually. But for now, we're still definitely seeing the aftershocks.

So periods of uncertainty to be sure, but for the moment anyway, we should all relax a bit about the global coming recession that's not coming.

Yeah, I mean, I think the great irony of this particular episode is that the concerns of recession that we have right now are appearing just as the rich world appears to be pulling off this quote unquote soft landing, which was the thing that everyone was talking about endlessly in 2022 and 2023. Is the rich world going to have a hard landing, i.e., a recession, or a soft landing, i.e., no recession, as a result of the rates going up? I mean, yes, it's true, worries about the economy can become self-fulfilling to an extent as potential spenders and investors become skittish. Inflation is not totally defeated, and interest rates are still high. But the way I see it is that for now, the global economy is actually in pretty decent health.

Callum, thanks very much for joining us.

Thanks, Jason.

In the first episode of our dating series last week, we looked into why the big, well-established dating apps are struggling.

Ora Ogunbiyi is our Africa correspondent and part-time dating correspondent.

Today, a look at what people are trying instead. And believe me, the apps are taking note. Some of it is down to nostalgia. Lots of single people want to meet offline like the olden days. They want to do in-person activities and find like-minded people. Others, done with putting the matchmaking at the mercy of an algorithm, or going to professionals instead. But the underlying theme is that people want more personalized dating experiences with a smaller number of better matches. On a sticky summer evening in New York, a line snakes around Maxwell, a fancy members club in Tribeca. Each person has been selected from a waiting list of 20,000 applicants. And has completed a personality quiz on their phones. A company called Matchbox, one of the event's hosts, will use their answers to connect them with someone else in the room who they're allegedly most compatible with. My colleague Holly Berman went to check it out. Actually, it's just very awkward. It feels a lot like people are just treating each other like they're on a dating app right now. The conversations are quite awkward. That was my check-in from a bathroom stall at the event. It'll be another couple of hours before I found out who my match was via text message. At this point, the energy inside the room felt something like being at a New Year's Eve party with 5 minutes to go until midnight. The crowd was mostly your typical 20 to 30-somethings that live or work in Manhattan. It was pretty noisy, so I had to sneak back into the bathrooms to catch up with some of the attendees. When I saw this come up on my Instagram or TikTok, it was so exciting, the idea. So I signed up immediately, and I was shocked that I got access to a ticket. I didn't think it would be a great idea to drag male attendees into a bathroom cubicle, so I spoke to them outside. I mean, why do you think people are coming to these events and like paying $75?

Because they want to meet people in person.

They want to— they like— they want their love story where you you see somebody across the room and you lock eyes. My perfect match scored at around 60% compatibility, was nice enough, but we haven't kept in touch. One woman I spoke to felt similarly about her match, and I also witnessed another man being given a free drink because his match left early. This is not to say that fairy tales did not happen for some that night, even if I didn't spot them. These kinds of events are becoming more and more common. There's another app that plans events for singles to meet in person in 30-odd cities from Adelaide to Amsterdam. It's called Thursdays because the app is only available then for people who want to meet that same day. Eventbrite saw the attendance at dating and singles events rise 42% between 2022 and 2023, including everything from trivia nights to singles paddleboard yoga. Some of the shift is down to the pandemic, It feels that there's now fewer opportunities to meet people. More working from home means that the office is kind of out of it. Perhaps because they drink less, young people don't just rock up to bars in the same way as previous generations did either. But it's also because more people want to bond over hobbies. The stuff that people picked up in lockdown— the cooking, knitting, even running— are becoming the center of new events. There's been a lot of noise in particular about finding potential partners on workout tracking apps like Strava or at run clubs. So my colleague Henrietta McFarlane went down to PureSport in London, a firm that hosts some very popular running events.

But we'll do a warm-up to start and then we will head off.

All right, so we'll start off with some high knees. So apparently there are like 300 people here on a Saturday morning on average. Most of the people look in their 20s They're wearing very nice sports outfits. We've got a lot of pinks going on, bright colors, slicked-back buns. So it was kind of difficult to chat and run. And when I asked people why they drag themselves out of bed before 9 AM on a Saturday morning just to go for a run, most told me they come for in-person social connection. Now, Pure Sports say they aren't primarily a place for dating, But lots of people could recount these stories of love blossoming, even under the sweatiest conditions. I've met multiple people at this run club that have found situationships or partners here. For some people, it takes a lot of drinks to get to that point, and in running it just takes, I don't know, like 10 kilometers, 20 kilometers.

You come on the weekend and you look at people and they are taking care of themselves and looking at people, okay, you not only they are wearing nice gear, here, but also taking care of themselves and trying to smile.

And it's in the morning and you're like, whoa, damn! And some of the runners I spoke to are going to have to up their running game just to make it to the right introductions. The guys are really fast. It was full of men and now they're all gone because they all would have run past. Now the older dating apps are taking note. So take Tinder and Bumble, for example. Who've collaborated with run clubs in London to host events. But this isn't the only reason that people are logging off dating apps. Ultimately, after years of unsuccessful swiping, they want more personalized dating experiences. If you were our client, we would get to know you well. We would want to learn more about your goals, your values, your lifestyle, your previous relationship experiences, try and kind of identify— That's Erica Kaplan from a high-end matchmaking company called Three Day Rule. Whose members also have to fill out an extensive questionnaire. She says that the company now has twice as many members as they had in 2019. Among young people under 30, 3 times as many. When I started 10 years ago, matchmaking was still a little bit taboo, dare I say. Now I think the sentiment around matchmaking is, I'm empowered to do something differently because the apps just kind of stink. To put it lightly, their services don't cost —cheap. So our prices start at $5,900 for 3 months and they range to generally about $20,000. But they do streamline things. Given that filtering hundreds of samey profiles on the apps can feel like a full-time job anyway, why not pay matchmakers to do the job for you? So matchmaking is kind of the antithesis of dating apps in that we're not looking to set people up with a million first dates. Erica is hinting there at that clear desire for quality over quantity. And the market is responding. There's Swan, a newish paid app that promises exactly that: fewer but more meaningful connections, and even arranges the dates for you. An investor-backed Marriage Pact is on 88 American campuses matching up students with a marital backup plan.

It started out as this little academic intellectual exercise. Who would be the best person for you to have a backup plan, which would treat you well for 50 years if you had to.

That's Liam McGregor, the founder of Marriage Pact and Matchbox, who ran the event that Holly went to in New York. He said that Marriage Pact started as a student experiment, but now he claims it has almost half a million participants and is behind nearly a quarter million matches.

And you're 3 to 4 times more likely to actually date your Marriage Pact match for a year or longer than you are to meet up with your match from a dating app.

After last week's look at dating app trends, you might think that the combination of shifting preferences and all this innovation in the market might kill off the big incumbents. If they want to survive, the likes of Tinder, Hinge, and Bumble just have to keep up. It won't be easy, but then again, has love ever been an easy business? Next week, we take this story beyond the West, where dating apps don't seem to be doing too badly.

The village of Wasdale Head in the Lake District in the northern part of England is a tiny little place of scattered stone cottages, but it's ringed by great mountains, including Kirkfell, Great Gable, and the highest mountain in England, Scafell, which is more than 3,000 feet high.

Anne Rowe is The Economist's obituaries editor.

And if you passed over it in a helicopter or a drone most times in the last few decades, you might have seen a very slight, sinewy figure running down the slopes in shorts and a vest. And this would've been Joss Naylor, who was the champion of fell running. Fell running being the ability to race about over the mountains and the screes and the rocks as if you are a creature of the mountains indeed. When he got to the end of one of these great runs, he would make for the beck which flowed at the foot of the mountains and make sure he gave his legs a really good wash. Cooling, refreshing scrub. Those legs were quite something. He'd had extensive surgery on his right knee, and that always looked very swollen and rather discolored. So all the power in his running had to come from his left leg, and it had indeed achieved some fantastic results. The strange part about it is one leg, you can tell this one here, it's at least a third bigger than that one, and it's just with favor in that knee, you know, over the years. He'd managed to do the best times on several of the great fell running challenges in Britain, including the Peaks Challenge, which means you have to go up the highest mountains in England, Wales, and Scotland and do it all in 12 hours. If including the driving time between them. He'd also managed to run all 142 of the peaks described in one of the classic Lakeland guides in only just over a week. When he was 60, he deliberately ran 60 mountains, as captured in the documentary Naylor's Run.

Was there ever a moment when you thought you weren't going to make it?

No. Was there ever a moment when you regretted starting No, no, it's been one tremendous experience.

You've experienced something that will never be done by a 60-year-old again. And when he was 70, he ran 70. He liked to celebrate his big birthdays properly. But the most magic of all his runs, he often said, was the fact that he went up and down Scafell, the mountain that loomed behind the village. In 47 minutes, and so very fast that a man who saw it said that he must be a mountain goat. Well, that wasn't so far out perhaps, because Joss had been brought up on a farm. His father was a tenant farmer, grazed sheep in the hills, and Joss at the age of 15 left school and went to do the same thing. So he knew about walking and running in mountains from being a child and spending all day out there. He didn't get into racing on the mountains until 1960 when he was 24, and he just decided to turn up at the mountain trial in Wasdale. He didn't have any of the equipment he needed, didn't have the shoes or the shorts. So what he did was just go in his heavy working boots and cut his working trousers off at the knee. So he was more or less equipped, but he got a terrible cramp on the run from running in boots like that. And at one point he had to borrow a salt cellar from some girls who were picnicking on a mountain and emptied half of it into his hand and had it just to drive the cramps away. Nonetheless, he was quite pleased with that run. He ended halfway up the field, and always put it that way, it was not down the field, it was up the field. He discovered he had a competitive streak, and from then on he raced as much as he could. He didn't do a great deal of training, however, because he was first and foremost a sheep farmer. He had nearly 2,000 sheep grazing on the high fells. He had to be seeing to them, gathering them in and taking them out every day. And when he was not doing that, he was finding odd jobs to do about the farm. But he did have two big advantages for being a fell runner, and they were unexpected perhaps. The first was that he was also a dry stone waller, and he learned from this not only how to heave stones and give himself a good workout that way, but also how stones were set and how they tended to settle. And this was extremely important when running over rocky ground and over scree. And the second advantage was that he was very good at putting pain behind him because he didn't only have a bad right knee, he also had a back that was in a terrible condition. And when he was doing his very long runs, he used to get a bit of massage in the breaks. But otherwise, he just said, "Face up to the pain. You'll get through it. It will gradually fade away, and then you'll forget about it." His reasons for running were very simple. He loved the scenery where he was. He thought it was the most beautiful part of England. He especially liked the sunsets up there. The views views of the mountains and the solitude. He could run without seeing a single soul. But when he set out his instructions for what should be done at his funeral, he wanted a celebration of his life, and there was one most obvious way to do it, which was to gather all the fell runners together and to get them to come over the various different passes into Wasdale and to run to the church alongside his coffin. So that was what he organized. And if you had been in a helicopter at the funeral, you would have seen this wonderful sight of crowds of runners, most of them in their club colours, running down the slopes of the fells, full of the joy that Joss Naylor also felt.

Anne Rowe on Joss Naylor, who's died aged 88. That's all for this episode of The Intelligence. The show's editors are Chris Impey and Jack Gill. Our deputy editor is John-Joe Devlin, and our sound designer is Will Roe. Our senior producers are Rory Galloway and Sarah Larniuk, and our senior creative producer Executive producer is William Warren. Our producers are Maggie Khadifa and Benji Guy, and our assistant producer is Henrietta McFarland, with extra production help this week from Elna Schutz. We'll all see you back here tomorrow for the Weekend Intelligence.