Economy of the United States and Europe
2024-02-26
■ Inflation has eased to some extent, and hard data has fallen into a landslide
■ The entire eurozone has avoided an economic recession, but Germany's sense of opacity still exists
In the Consumer Price Index (CPI) for January, both the overall (up 3.1% year-on-year and 0.3% month-on-month) and the core excluding food and energy (up 3.9% year-on-year and 0.4% month-on-month) showed a two-month slowdown in terms of year-on-year growth, but an acceleration in terms of month-on-month growth. On a month-on-month basis, the largest components such as housing costs, car insurance premiums, and air freight have increased, eliminating market expectations for a slowdown in inflation. The retail sales in January (a month-on-month decrease of 0.8%) exceeded market expectations (a year-on-year decrease of 0.1%), recording a decline that exceeded expectations. Although some people believe that the data is distorted by seasonal factors, the downward adjustment of data from November and December last year suggests that the momentum of individual consumption in the United States may be slowing down. The industrial production index in January (decreased by 0.1% month-on-month) was opposite to market expectations (increased by 0.3% year-on-year) and turned down. Durable goods (up 0.1% year-on-year) have received support in semiconductor production and other areas, but non-durable goods (down 1.1% year-on-year) and mining industry production (down 2.3% year-on-year) have been affected by harsh winter weather.
The real GDP growth rate of the Eurozone for the October-December period last year (second quick report value, month-on-month unchanged) was the same as the preliminary report value. Although avoiding two quarters of negative growth, at the national level, as the largest economy in the eurozone, Germany (down 0.3% year-on-year) is still considered to have entered a defined economic recession. On the other hand, Italy (up 0.2% year-on-year) and Spain (up 0.6% year-on-year) have remained strong. The European Commission has lowered its economic growth forecast for 2024 (a year-on-year increase of 0.8%), particularly expressing concerns about the weakness in the January-March period of this year. For the forecast for 2025 (a year-on-year increase of 1.5%), the downward adjustment is relatively small, and it is expected to achieve a slow recovery with the support of real wage increases and a stable labor market. The German ZEW economic outlook index (+19.9, up 4.7 points month-on-month) improved for the seventh consecutive month in February, but the current situation index (-81.7, down 4.4 points month-on-month) hit a low level since June 2020. In addition, the German government reportedly lowered its outlook for this year's real GDP growth rate from the previous 1.3% to 0.2%, indicating that the opacity surrounding the German economy still exists.
■ The entire eurozone has avoided an economic recession, but Germany's sense of opacity still exists
In the Consumer Price Index (CPI) for January, both the overall (up 3.1% year-on-year and 0.3% month-on-month) and the core excluding food and energy (up 3.9% year-on-year and 0.4% month-on-month) showed a two-month slowdown in terms of year-on-year growth, but an acceleration in terms of month-on-month growth. On a month-on-month basis, the largest components such as housing costs, car insurance premiums, and air freight have increased, eliminating market expectations for a slowdown in inflation. The retail sales in January (a month-on-month decrease of 0.8%) exceeded market expectations (a year-on-year decrease of 0.1%), recording a decline that exceeded expectations. Although some people believe that the data is distorted by seasonal factors, the downward adjustment of data from November and December last year suggests that the momentum of individual consumption in the United States may be slowing down. The industrial production index in January (decreased by 0.1% month-on-month) was opposite to market expectations (increased by 0.3% year-on-year) and turned down. Durable goods (up 0.1% year-on-year) have received support in semiconductor production and other areas, but non-durable goods (down 1.1% year-on-year) and mining industry production (down 2.3% year-on-year) have been affected by harsh winter weather.
The real GDP growth rate of the Eurozone for the October-December period last year (second quick report value, month-on-month unchanged) was the same as the preliminary report value. Although avoiding two quarters of negative growth, at the national level, as the largest economy in the eurozone, Germany (down 0.3% year-on-year) is still considered to have entered a defined economic recession. On the other hand, Italy (up 0.2% year-on-year) and Spain (up 0.6% year-on-year) have remained strong. The European Commission has lowered its economic growth forecast for 2024 (a year-on-year increase of 0.8%), particularly expressing concerns about the weakness in the January-March period of this year. For the forecast for 2025 (a year-on-year increase of 1.5%), the downward adjustment is relatively small, and it is expected to achieve a slow recovery with the support of real wage increases and a stable labor market. The German ZEW economic outlook index (+19.9, up 4.7 points month-on-month) improved for the seventh consecutive month in February, but the current situation index (-81.7, down 4.4 points month-on-month) hit a low level since June 2020. In addition, the German government reportedly lowered its outlook for this year's real GDP growth rate from the previous 1.3% to 0.2%, indicating that the opacity surrounding the German economy still exists.