Eurozone money update: from bad to worse

There are three messages from Eurozone monetary data for May released yesterday. The region faces a major recession that is likely to extend into early 2023, at least. Economic prospects are at least as bad for core countries as for the periphery. Nominal monetary trends are consistent with inflation returning to – or falling below […] Continue reading

“Excess savings” won’t rescue UK consumption

Economic “optimists” argue that UK / US recessions will be avoided because households and firms have accumulated a “war chest” of excess monetary savings that will be deployed to support spending. The assessment here is that high inflation is rapidly eroding excess money balances while households / firms are unlikely to reduce precautionary savings against a […] Continue reading

More recession-consistent US data

Shorter-term leading indicators are confirming the negative signal for US economic prospects from monetary trends. An independent calculation of the OECD’s US composite leading indicator suggests another fall in the indicator in June along with upward revisions to declines in prior months – see chart 1. Chart 1 The indicator is calculated as a ratio […] Continue reading

China an outlier as global real money weakness intensifies

Global six-month real narrow money momentum – a key monetary leading indicator of the economy – is estimated to have moved deeper into negative territory in May, suggesting that a likely recession over the remainder of 2022 will extend into early 2023 – see chart 1. Chart 1 The May estimate is based on monetary […] Continue reading

Chinese money trends still hopeful

Chinese May money numbers give a moderately positive message for economic prospects, suggesting that recent policy easing is gaining traction. Assuming that pandemic disruption is contained, domestic demand is expected here to recover during H2 2022 and into 2023, partially shielding the economy from export weakness due to G7 recessions. Six-month broad money growth rose […] Continue reading

Stockbuilding data add to recession concerns

G7 GDP data confirm that stockbuilding gave an unusually large boost to growth in the year to Q1. Stockbuilding is almost certain to fall over coming quarters, implying that the growth impact will turn from positive to (probably large) negative. Prospective weakness in stockbuilding reinforces the recessionary signal from real money contraction. Japanese and Eurozone […] Continue reading

Fade the “better” economic news

Recent economic data have been interpreted as supporting the view that global growth is showing “resilience” in the face of significant shocks, in turn suggesting scope for central banks to continue to dial up hawkishness. This reading of the data is disputed here while monetary trends continue to signal a high probability of a recession […] Continue reading