This year was widely touted, just a few months ago, as a breakout year for the global economy in general, and the U.S. economy in particular. However, frustratingly turgid growth in the United States continues, with GDP growing at an annualized rate of only 0.1 percent in the first quarter and the country’s housing rebound has apparently stalled. Meanwhile, fears of deflation in the Euro zone and Japan, as well as a new sales tax in the world's third-largest economy, and a continuing slowdown in economic expansion in China have conspired to maintain tension across the globe in all things financial.
That was well seen in the JCK Show in Las Vegas at the start of this month when many diamantaires and jewelry manufacturers reported that buying was for the most part taking place only to fill specific orders. Few customers were looking to build up inventory. Why would they? Uncertainty remains rife and no-one wants to be caught short. Admittedly, the JCK Show is not of the same type as the Hong Kong gem and jewelry fairs where widespread trading takes place in a show known for transactions taking place. JCK is more of a meeting place where buyers and visitors come to see what's available in the global marketplace. Nonetheless, reports from visitors and exhibitors suggested the show was overall no better than fair.
Looking at the U.S. economy, on the one hand American employers added 217,000 jobs in May and the labor market reached a milestone with the recovery, five years later, of all 8.7 million jobs lost in the recession. However, the unemployment rate was unchanged at 6.3 percent, the Labor Department said. Numbers of employed, at 138.5 million, is higher than the pre-recession level for the first time in the nearly five-year-old recovery.
Although the milestone is not to be dismissed, U.S. employment is actually lower than it ought to be after taking into account the growth in population and the labor force since the recession. Not only that, but analyses of the jobs recovery point to many of the jobs created being in the lower-paid service industries and being part-time positions rather than solid middle-class jobs. In addition, where once the second bread-winner in the family may have worked in a service industry position, the main bread-winner in many families today has taken over that role. Clearly, that is not much of a basis for a rise in retail sales in general, and for retail jewelry sales in particular.
Furthermore, the long-term jobless still compose more than one-third of all unemployed. Meanwhile, even among those who are working, the rise in salaries is very low, leaving less and less disposable income due to other costs rising.
Who's making more money? According to former Treasury Secretary Larry Summers, income for the top 10 percent of the population has risen significantly over the last few years while income for the rest of the country has fallen.
Although retail sales in the world's biggest economy are rebounding after a particularly harsh winter that reduced consumer spending, it is expected that the Federal Reserve will have to continue to inject billions of dollars into the American economy in a bid to get it moving.
Add to all that falling yields on long-term government bonds, widely regarded as an indicator of investors’ expectations for growth and future interest rate movements. The yield on America’s 10-year bonds has dropped to 2.5 percent, half a percentage point below its level just six months ago. If one takes into account that growth trends in U.S. economy tend to span periods of five years, we might be about to see the American economy turning down after barely having moving up in any substantial way since the financial crash of late 2008.
Meanwhile, last week's move by the European Central Bank to stave off deflation by cutting a key interest rate in a move aimed at encouraging banks to increase lending, and pumping billions into the moribund European economy are welcome moves, but indicate a degree of desperation. The bloc's $13 trillion economy is close to the size of the U.S. economy and a vital global player. The economy of the 18 countries which have adopted the single currency grew at a slower pace than forecast at the start of this year and analysts are concerned that it might slow even further in the second three-month period of this year.
Although there is some growth in the European Union, in Britain and Germany, for example, economists fear that stagnation is becoming increasingly entrenched in other countries, such as France, Italy and Greece.
As for China, the world's second-biggest economy, can it help lead the global economy? It has been the engine of global growth for the past decade or so and countries everywhere have become used to it being the world's workshop.
The Chinese economy will grow by 7.6 percent this year, a tremendous growth rate by the standards of any other country or economic bloc, but down on last year's 7.7 percent rate of expansion. Meanwhile, its growth rate is seen slipping to 7.5 percent in 2015.
This year's predicted growth rate is the slowest since 1999, largely a result of stilted world economic expansion and a resulting decline in Chinese exports. In addition, China's leadership is restructuring the economy with the aim of raising domestic consumption in order to slash the country's dependence on exports.   
What does all that mean for the diamond industry? Largely the same as it does for most other business sectors. Continued vigilance, just-on-time ordering, extremely tight cost controls, slashing or eliminating consignments and memo goods, increasing use of technology to reduce labor-intensive tasks, and further development of niche markets, amongst other tactics. In other words, what the industry has been doing for the past several years. Although 2014 may yet surprise us, that would not be a good basis for a business strategy.