Economy

Is Europe in a recession now: the consequences are listed

Published

1 year ago

August 15, 2022

Is Europe in a recession now? The depth of the recession in the eurozone will depend on the pace as well as the extent of the economic decline, which can be tried to regulate by raising key interest rates. The consequences of a recession could be a drop in personal income and a rise in unemployment.

The euro zone economy is very likely to face a recession, according to 60 percent of experts surveyed by Bloomberg. That number has risen from 45 percent in the last survey and 20 percent since the Russian invasion of Ukraine.

Is there a recession in Europe?

Is there a recession in Europe? There are different variations on the speed at which the eurozone is going into this dynamic. Most markets will show zero or negative growth in the third quarter. Naturally, this will have an immediate impact on equity and commodity markets. This, in turn, will lead to big changes in the economy.

Different countries, regions and markets will go into recession unevenly. Most likely, the USA will show one more quarter of negative growth rates, which will be a clear indicator of a departure into this phase. The same is likely to be true for Europe.

There is no recession in China, but the growth rate is already declining. This is also a significant factor which will affect the global economy. The depth of the failure will depend on how the authorities of different countries will react to what is happening: whether they will slow down the increase in rates; whether they will manage to achieve a balance. This will have an impact on the price of raw materials, unemployment, etc.

No precise predictions are impossible to make at the moment: we will have to wait for statistics for the third quarter or at least for August.

Earlier we reported on an unexpected threat to the U.S. economy.

Economy

Fed pivot to interest-rate cuts seen likely to start in May

Published

1 hour ago

December 9, 2023

Fed pivot to interest-rate cuts seen likely to start in May

By Ann Saphir

(Reuters) – A stronger-than-expected U.S. labor market won’t keep the Federal Reserve from pivoting to a series of interest-rate cuts next year, but it could take until May for it to deliver the first reduction, traders bet on Friday.

Employers added 199,000 workers to their payrolls in November, the Labor Department’s monthly jobs report showed, more than the 180,000 that economists had expected, and the unemployment rate unexpectedly fell to 3.7%, from 3.9% in October.

Hourly earnings ticked up 0.4% from a month earlier, more than expected and an acceleration from the prior month. But the labor force participation rate also rose, to 62.8%, easing the prospect that an overheated job market will short-circuit progress on the Fed’s inflation battle.

A separate report Friday showed U.S. consumer sentiment improved more than expected in December as households saw inflation pressures easing.

The U.S. central bank is expected to keep rates in the current 5.25%-5.50% range when it meets next week, leaving policy on hold since July. Traders before Friday’s jobs report had put about a 60% probability on a March start to Fed rate cuts, but after the data reduced that to just under 50%, with a first reduction seen as more likely to come in May.

Further rate cuts are priced in for the rest of 2024, with the policy rate seen ending the year in the 4%-4.25% range as the Fed adjusts borrowing costs downward not as an antidote to a weaker labor market but rather to keep pace with an expected continued cooling in inflation.

The pace of that improvement in inflation will help determine the timing of the Fed’s pivot to rate cuts, analysts said.

“We maintain our call for the Fed to start cutting rates by mid-year, but it is contingent on inflation continuing to trend lower and further weakening in economic activity,” wrote Nationwide economist Kathy Bostjancic after the report.

Fed policymakers will release their own views of where the economy, inflation, and interest rates will go next year when they wrap up their last meeting of the year on Wednesday.

Economy

US consumers’ moods brighten as inflation worries subside – UMich

Published

1 hour ago

December 9, 2023

US consumers' moods brighten as inflation worries subside - UMich

(Reuters) -U.S. consumer sentiment perked up much more than expected in December, snapping four straight months of declines, as households saw inflation pressures easing, a survey showed on Friday.

The University of Michigan’s preliminary reading of its Consumer Sentiment Index shot up to 69.4, the highest since August, from November’s final reading of 61.3.

The median expectation among economists in a Reuters poll had been for the index to edge up to 62.0.

“Consumer sentiment soared 13% in December, erasing all declines from the previous four months, primarily on the basis of improvements in the expected trajectory of inflation,” survey Director Joanne Hsu said in a statement.

The survey’s preliminary gauge of current conditions rose to 74.0 from last month’s final level of 68.3, while the expectations index climbed to 66.4, the highest since July, from 56.8 in November.

Consumers’ outlook for inflation in the year ahead plunged to 3.1% – the lowest since March 2021 – from November’s final expectation of 4.5%. The 1.4 percentage point decline was the largest monthly drop in one-year inflation expectations in 22 years.

Over a five-year horizon, consumers expect inflation to average a three-month low of 2.8%, down from 3.2% in November, which had been the highest since March 2011, when it reached the same level.

Economy

Russian inflation accelerates in November, rate hike beckons

Published

1 hour ago

December 9, 2023

Russian inflation accelerates in November, rate hike beckons

MOSCOW (Reuters) – Inflation in Russia accelerated in November, data from state statistics service Rosstat showed on Friday, cementing expectations that the central bank will hike interest rates as it meets for the final time this year on Dec. 15.

The central bank has now raised rates by 750 basis points since July, including an unscheduled emergency hike in August, under pressure from a weak rouble, tight labour market and strong consumer demand. Analysts widely expect another hike, to 16%, next week.

High interest rates are one of several irksome economic challenges facing President Vladimir Putin, who on Friday said he would run again for president next year, although none seem insurmountable thanks to Russia’s success in evading a Western oil price cap helping to drive a recovery in economic growth.

In November, annual inflation stood at 7.48% year-on-year, up from 6.69% a month earlier and just shy of analysts’ expectations of a 7.6% reading.

The data suggests that annual inflation will exceed the central bank’s expectation of year-end inflation at the upper end of the 7.0%-7.5% range, which is well above its 4% target.

On a monthly basis, the consumer price index (CPI) rose 1.11% in November after a 0.83% increase in October, the data showed, coming just below analyst forecasts of a 1.2% increase. That was the fastest monthly rise since April 2022.

In the week up to Dec. 4, consumer prices rose 0.12%, separate Rosstat data showed.

Russian households regularly cite inflation as a major concern, with many having no savings after a decade of economic crises, while rising prices dragged living standards down across the country.

Rosstat gave the following details:

RUSSIAN CPI Nov 23 Oct 23 Nov 22

Mth/mth pct change +1.11 +0.83 +0.37

– food +1.55 +1.35 +0.40

– non-food +0.53 +0.55 +0.06

– services +1.23 +0.48 +0.76

Y/Y pct change +7.48 +6.69 +11.98

Core CPI y/y pct change +6.36 +5.50 +15.06