EU-DIGEST: recession

Showing posts with label recession. Show all posts

11/3/22

Britain: major and long recession expected

The Bank of England warned Thursday that the U.K. is facing its longest recession since records began, with the economic downturn expected to extend well into 2024.

The central bank described the outlook for Britain’s economy as “very challenging,” noting that unemployment would likely double to 6.5% during the country’s two-year slump.

8/26/22

Russia faces deep recession that will 'only get deeper,' Treasury official says - by Matt Egan

Sanctions leveled on Russia have pushed the country toward becoming a closed economy, a status the country is ill-equipped to handle, a senior Treasury official said on Friday.

"The economic consequences Russia is facing are severe: high inflation that will only get higher, and deep recession that will only get deeper," the official told reporters during a conference call.

Among other steps, Western powers have frozen about half of Russia's foreign reserves, banned certain Russian banks from the high security SWIFT banking network and blocked exports of key technology to Russia. States has also prohibited the import of Russian oil, natural gas and petroleum products.

9/15/20

Global Economic Recession"US, China, India, Europe can't save global economy from recession - by Linette Lopez

The coronavirus depression will be much worse than the last worldwide recession, because this time no country is strong enough to rescue the global economy.

The story of the Great Recession goes like this: the US and Europe were crippled while working to clean up their devastated banking system, the global services sector suffered without its biggest player — the US consumer engine — but global economic growth didn't completely fall off a cliff because other countries kept money moving around the planet.

Over in China policymakers enacted a massive stimulus to skip over the recession entirely. The country's GDP grew 9.4% in 2009. India chugged along as if the crisis barely happened, with its GDP growing 7.9% in 2009.

But this time there is no corner of the globe that has been left untouched by the pandemic or its effects. And so, there's no country that can reasonably chug along and keep things from getting truly disastrous.

Read more at:
US, China, India, Europe can't save global economy from recession - Business Insider

7/23/20

South Korea enters recession as exports plunge by most since 1963

Asia’s fourth-largest economy shrank by a seasonally adjusted 3.3% in the June quarter from three months earlier, the Bank of Korea said on Thursday. That is the sharpest contraction since the first quarter of 1998 and steeper than a 2.3% fall seen in a Reuters poll.

South Korea joins Japan, Thailand and Singapore in technical recession, defined as two straight quarters of decline, as the pandemic slams Asia’s trade-reliant economies.

Read more at :
South Korea enters recession as exports plunge by most since 1963 - Reuters

5/23/20

Wall Street: in "Dream On Mode": Are stock investors too complacent about a full-scale blowup between China and the U.S.? Here’s what Wall Street experts say

As MarketWatch’s sister publication Barron’s writes, the Sino-American issues are many and include actions taken by the U.S. to censure China’s new security rules that threaten Hong Kong’s

semiautonomous status, restrictions against Huawei Technologies, a push to increase scrutiny of Chinese companies listed in the U.S., funding for the World Health Organization, and accountability for the handling of the viral outbreak that has likely ushered in one of the most severe global recessions in the past 100 years.

“The list is long as my arm,” said Ian Bremmer, Eurasia Group’s founder and president, of the Sino-American tensions, during a Friday interview on CNBC.

“It’s never a good thing that the two largest economies in the world are battling,” Peter Boockvar, chief investment officer of Bleakley Advisory Group, told MarketWatch in an emailed exchange on Friday.

Tensions between the countries, however, don’t seem to have supplanted the intense investor focus on reopening the economy in the U.S., and elsewhere in the world, or attention on a cure for the COVID-19 pandemic, which have helped to buoy risk assets.

“I think the market likely sees the upside risk related to finding a vaccine or treatment as near-term, and the downside risk related to China as long-term, so they are focusing more on the near-term right now,” Lindsey Bell, chief investment strategist with Ally Invest, told MarketWatch on Friday.

“After a 30% plus rally from the March lows, the bar is definitely much higher. As the worries with China heat up, we do think investors could be a little too complacent here and now,” said Ryan Detrick, senior market strategist at LPL Financial.

“The economic recovery is still very fragile and any larger repercussions between the U.S. and China could put a halt to the equity rally quite quickly,” he told MarketWatch.

Read more at: Are stock investors too complacent about a full-scale blowup between China and the U.S.? Here’s what Wall Street experts say - MarketWatch

4/9/20

US Labor statistics: 6.6 million Americans filed for unemployed benefits last week, bringing the coronavirus total to over 17 million

Economist say the U.S. unemployment rate is now 12 or 13 percent, the worst since the Great Depression. This brings the pandemic total to over 17 million9

Read more at:
https://www.washingtonpost.com/business/2020/04/09/66-million-americans-filed-unemployed-last-week-bringing-pandemic-total-over-17-million/

4/6/20

The Wall Street Smoke Screen : Will Dow futures point to a nearly 700 point Monday opening gain despite another oil-price drop

U.S. stock futures rose on Sunday night as Wall Street tried to recover from another decline last week. and more problems on the energy (oil) market.

Read more at:
https://www.cnbc.com/2020/04/05/stock-market-futures-open-to-close-news.html

3/27/20

USA: The Hidden Depression Trump Isn’t Helping - by Nicholas Kristof

The economy may get the president re-elected, but not everyone is sharing in its strength.

Read more at:
https://www.nytimes.com/2020/02/08/opinion/sunday/trump-economy.html

3/26/20

USA Unemployment: US unemployment skyrockets as coronavirus crashes economy

However, the figures were recorded before Congress signed off on a $2 trillion stimulus package that seeks to help businesses and workers as coronavirus ravages the economy.

Yet it is unlikely that even the biggest government stimulus package in history can stop unemployment from soaring to record highs and the US entering a deep recession.

Commerzbank economist Christoph Bolz said: “The lockdown of the economy is likely to cost more jobs in the coming weeks. We fear that the US unemployment rate will reach a post-war record by mid-year.”

Bolz predicted the US unemployment rate could rise from 3.5 per cent to 11.5 per cent, putting roughly 19m Americans out of a job. That would be higher than the previous post-war record of 10.8 per cent at the end of 1982.

Read more at: US unemployment skyrockets as coronavirus crashes economy : CityAM

3/23/20

Europe Is Unprepared for the COVID-19 Recession by Yanis Varoufakis - by Yanis Varoufakis

The Eurogroup of eurozone finance ministers is struggling to agree on a macroeconomically significant coordinated fiscal response to the enormous recessionary effects of the COVID-19 pandemic. The result, I fear, will be heroic announcements heralding impressive numbers that disguise the irrelevance and timidity of the agreed policies.

The first indication of this comes from the recent announcement of the German government’s financial aid package to the private sector. While the international media referred to it as a €550 billion ($600 billion) bazooka, close inspection suggests it is no more than a water pistol.Comprising tax deferments and large credit lines, the German package reveals a serious misunderstanding of the nature of the crisis.

And it is the same misunderstanding that turbocharged the euro crisis a decade ago. Now, as then, companies and households are facing insolvency, not illiquidity. To arrest the crisis, governments must go “all in” with stupendous fiscal expansion. But that is exactly what the German package was meant to avoid.

Finance ministers from countries in deeper economic trouble than Germany (for example, Italy and Greece) will undoubtedly try to push for the necessary fiscal expansion. But they will hit the brick wall of opposition from the German finance minister and his loyal supporters within the Eurogroup.

Soon the “southerners” will fold their tent, their acquiescence sealing yet another fiscally insignificant Eurogroup package that the oncoming recession will steamroll.How can I be so sure?

Because I’ve been there. I represented Greece at the Eurogroup meetings in 2015, where the defeat of our government’s desperate struggle to avoid more loans at the expense of deeper recession was decided. The methodical manner in which those Eurogroup meetings closed down any avenue to a rational debate on the appropriate fiscal policies holds the key to understanding why the Eurogroup will also fail to mount an effective fiscal defense against the pandemic-induced shock.

One insight from those crucial Eurogroup meetings five years ago stands out: any finance minister from a struggling country who dares oppose the Berlin line, or to propose solutions that benefit the majority of Europeans rather than the financial sector, is in for a hard ride.

Read more at: Europe Is Unprepared for the COVID-19 Recession by Yanis Varoufakis - Project Syndicate

3/20/20

U.S. recession chances now at 80% despite Fed emergency moves says Reuters Poll

The coronavirus crisis has almost certainly ended the longest U.S. expansion on record and pushed the economy into the start of a short slump, according to analysts polled by Reuters who gave a median 80% chance of recession this year.

The Federal Reserve in an emergency move on Sunday slashed interest rates back to near-zero and restarted its asset purchases program, and since then has added trillions of dollars of liquidity to keep markets functioning.

But that will not be enough to prevent a recession, even though economists for now appear to think the blow will be punishing but temporary, with most expecting at least a modest rebound in the second half of the year.

Read more at: U.S. recession chances now at 80% despite Fed emergency moves: Reuters poll - Reuters

3/18/20

Global Economy Global stocks drop as investors shun risk on coronavirus fears

U.S. stock futures and several Asian shares fell in choppy trade on Wednesday, as worries about the coronavirus pandemic eclipsed hopes broad policy support would combat the economic fallout of the outbreak.

Read more:
https://uk.reuters.com/article/uk-global-markets/global-stocks-drop-as-investors-shun-risk-on-coronavirus-fears-idUKKBN21504I

3/12/20

US Economy: The dominoes are aligned for a severe coronavirus-induced recession

The virus may prompt a severe recession that could erase much of the 11-year recovery.

Note EU-Digest: While the US Fed is pouring trillions of dollars into the financial system to prop up the US economy, it is also exposing the enormous damage successive US Governments have done in allowing the already disproportionate income gap between the "have and have nots" to grow, nearly beyond repair.

Read more at:
https://www.axios.com/the-next-dominoes-in-the-coronavirus-economy-b73d198b-6177-4d8b-bac8-d6ecb168e2c9.html

3/10/20

USA economic meltdown is inevitable: A market crash was coming, even before coronavirus - by Steven Pearlstein

This is what panic selling looks like. When everyone wants to sell and almost nobody wants to buy, prices suddenly stop having much to do with the underlying value of whatever it is that is being traded. As the expression goes on Wall Street, nobody wants to try to catch a falling knife.

But it’s even worse than that when most of these stocks, bonds and derivatives have been purchased with borrowed money. The wiseguys who now dominate the daily trading on Wall Street — the hedge funds and private equity funds — typically put down $1 or $2 of their own and their investors’ money for every $10 worth of the securities they purchase.

Ultimately, all of these pieces of paper that are furiously being traded on financial markets are tied to some company or some household in the real economy. And that is where you run into the second problem. For it turns out that those companies and households also hold record amounts of debt, which makes them sensitive to any reduction in their sales or profits or normal income flows. So even the prospect of an economic slowdown causes them to save more and spend and invest less. While that is perfectly rational behavior on the part of any business or household, when everyone does it at the same time, it becomes something of a self-fulfilling prophecy, turning what might have been a modest slowdown in the economy into a full-blown recession.

Note -EU digest: as the Washington Post reports The coronavirus panic could threaten a $10 trillion mountain of corporate debt, unleashing a cycle of layoffs and business spending cuts that would hit the economy just as some analysts are warning of a recession. Using a broad measure of business liabilities, the ratio of debt to assets is at its highest in 20 years, according to the Federal Reserve. One potential trouble spot lies in the rapid growth of “leveraged loans,” made by top banks such as Goldman Sachs and JPMorgan to scores of cash-short companies.

10/9/19

EU-US Trade War: A flood of new data from the US and eurozone suggests recession risks are flashing red. Here's a full rundown of the wreckage - by Ben Winck

Key economic metrics are flashing red for the US and the European Union as tensions between the two reach new highs.

The latest readings from prominent purchasing managers' indexes show manufacturing sectors the US and EU struggling amid global trade conflict and slowing economies. Service and non-manufacturing industries also slowed through September in both areas.

The negative signs arrive after the WTO granted the US permission to levy $7.5 billion in tariffs on EU imports, specifically targeting Boeing competitor Airbus.

Further escalation of trade conflict between the bloc and the US could plunge the two economies into deeper economic woes.

Read more at: A flood of new data from the US and eurozone suggests recession risks are flashing red. Here's a full rundown of the wreckage. | Markets Insider

10/3/19

Spain: Employment down, job creation in Spain returns to recession levels

9/14/19

Eurozone Economy: the shadow of recession deepens over the Eurozone - by John Weeks

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9/9/19

EU Economy: Shadow of recession deepens over the eurozone - by John Weeks

8/25/19

US Economy: : The Next U.S. Recession Looking More Likely As Trump Weaponizes Trade And The Dollar - by Yuwa Hedrick-Wong

Recessions in the U.S. are typically caused by monetary tightening, financial crises stemming from asset bubbles or external shocks. In spite of the U.S. Federal Reserve’s U-turn on interest rate normalization, all three are casting darkening shadows over the American economy. Morgan Stanley warned in a report released this summer that the U.S. has entered a new phase of rising probability of a recession. What may spark the next recession, however, remains obscure. The final trigger is usually something entirely unanticipated. For instance, what tipped the economy over the edge and ignited the 2008/09 global financial crisis is not the widely observed collapse of the American housing bubble, but the unsuspected extraordinary concentration of ownership of mortgage-backed securities. This is why President Trump’s actions on trade and currency, which has made the global economy so much more turbulent, is so dangerous. Economic turbulence is spawning potential recession triggers that could unexpectedly tip the American economy into recession.

By weaponizing both trade and currency, President Trump has infected the global economy with deep uncertainty. In imposing sanctions and tariffs—as well as banning American firms from doing business with a growing list of foreign companies on grounds of national security—Trump has enfeebled world trade, turning it into a brake on global growth. The business outlook has dimmed because companies are no longer sure where and with whom they can invest and expand without incurring the ire of the President, and it is affecting companies in the U.S. as well as in the rest of the world. The China-U.S. trade war is especially damaging because it effectively puts business investment on ice and suspends any meaningful forward planning. Many American companies are also deeply worried about their business in China, which in recent years generates close to $300 billion revenues annually.

Trump is also weaponizing the U.S. dollar, instructing the U.S. Treasury to put more countries under surveillance for suspected “currency manipulation,” subjecting them to potential retaliatory sanctions. No surprise that China has been named currency manipulator after the yuan’s recent depreciation; but the list also includes many of America’s closest allies in Asia and Europe. Furthermore, Trump has also changed the rules to make it easier to label a country a currency manipulator. However, concurrent to these moves is Trump’s own hectoring the Federal Reserve to cut interest rates both to shore up faltering domestic growth and to weaken the dollar to make American exports more competitive. All of these shenanigans have made currency markets more volatile, undermining global trade growth, according to research by IMF chief economist Gita Gopinath.

Read more at: The Next U.S. Recession Looking More Likely As Trump Weaponizes Trade And The Dollar

8/18/19

USA Economy: trump and his advisers reject talk of economic disaster

'I don't see a recession': Trump and advisers reject talk of economic disaster

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