Topping expectations, the French economy posted positive growth in the three months to December. Household consumption, government spending, fixed investment and exports all rose, while imports and inventories declined. We think France’s luck ran out in the first quarter of 2012, however, and that the economy entered a mild recession, led by household consumption. Author: Zach WittonDate: April 11, 2012
The chance that Greece, Portugal and Ireland will require further financial assistance is substantial. Author: Melanie BowlerDate: April 5, 2012
The U.S. economy is experiencing sturdy growth. Real GDP is expanding at nearly a 2.5% annualized pace, generating enough net new jobs to cut into unemployment. The jobless rate appears set to fall below 8% by year’s end. The economic data will turn a bit soft in coming months as the effects of the warm winter fade and higher gasoline prices take a toll, but the economy’s fundamentals are growing firmer.Author: Mark ZandiDate: April 4, 2012
Data estimation techniques benefit those analyzing and modeling local economies in several ways, including identifying turning points in local economies sooner with real data, improving forecast accuracy, enhancing economic models with longer time series and quarterly periodicity for economic drivers. Author: Megan McGee, Karl Zandi, Steve Cochrane Date: March 30, 2012
The global expansion remains on track, but the spillover financial and trade effects from the downturn in Europe have inhibited underlying growth momentum. On the upside, since last year, policymakers have made some meaningful progress to contain the sovereign debt crisis and deepen liquidity in the banking sector. Author: Ruth StroppianaDate: March 27, 2012
Data released over the past week centered mostly on housing and provided a somewhat downbeat view of the sector’s performance early in the first quarter. Residential construction fell unexpectedly while both new- and existing-home sales backtracked. The weakness was a bit surprising given solid job growth, rock-bottom mortgage rates, and unusually warm weather, all of which should have helped kindle demand.Author: Alexander MironDate: March 26, 2012
Big emerging markets and world equity benchmarks are enjoying strong investor demand through the opening months of 2012, although the same can’t be said for smaller, riskier markets. The world’s next emerging markets—the so-called frontier markets—including Sri Lanka, Bangladesh, Pakistan and Vietnam, have lost some of their shine.Author: Matthew Circosta Date: March 25, 2012
Policymakers are chipping away at the U.S. housing problem from many sides. One involves removing excess inventory by encouraging investors to convert distressed homes into rental units. This approach takes advantage of strong rental demand to get distressed homes off the sales market, thus removing a key source of downward pressure on prices. Yet an uncertain timetable and questions about how investors will respond mean the program's success is less than assured. Author: Celia ChenDate: March 15, 2012
The recent drubbing of the Congress party in India's state elections will reverberate well beyond the five states that went to the polls. It has implications for the national government’s reform agenda, and could say something about the longer-term outlook for Indian politics and the growing push for economic development. Author: Glenn Levine Date: March 13, 2012
Economic recovery is evident across the country. The unemployment rates of each of the four broad regions are back to post-recession lows following some retrenchment in mid-2011. Manufacturing is contributing to employment gains everywhere except in the Northeast, although rising industrial production in the Northeast implies strong productivity gains. Author: Steve CochraneDate: March 13, 2012
Much as they did a year ago, energy prices have emerged as key risks to the U.S. recovery. Concern about oil price shocks is well-grounded; 10 of the last 11 recessions have been preceded by such shocks. Brent crude oil futures have risen nearly 17% since the start of this year to $125 per barrel, pushed up by improved expectations for global oil demand, a cold winter in Europe and northern Asia, U.S. dollar depreciation, production disruptions, and rising geopolitical tensions. Author: Chris Lafakis Date: March 7, 2012
Chinese Vice President Xi Jinping recently concluded a visit to the U.S. with some success. His trip did not produce much in the way of new policy breakthroughs but was a useful gauge of his style. Policymakers in the U.S. benefited from a closer look at the heir apparent to President Hu Jintao—who made a similar trip before taking the top spot in 2002—but the main point of the trip was to boost the vice president's profile at home. Author: Alaistair Chan Date: February 27, 2012
Large emerging economies have fuelled global growth for much of the last decade. The economic and political presence of Brazil, China, India and Russia has grown sharply relative to the historically developed regions of the world. Analysts, investors and policymakers have long assigned higher risk probabilities to these economies than to those of the more mature OECD member countries. However, this perception is changing, in part due to the continuing sovereign debt crisis in Europe. Author: Petr Zemcik Date: February 28, 2012
The economic recovery is improving across much of the country. Unemployment rates in all four broad regions of the country are back to post-recession lows as of December. Rates had spiked in the third quarter as the economy adjusted to the many shocks, including the manufacturing supply-chain disruptions following the Japanese earthquake and tsunami and the Thai floods, the European sovereign debt crisis, and the rancorous fiscal policy debates in Washington.Author: Steve CochraneDate: February 22, 2012
Economic growth in the Central and Eastern Europe countries has been diverging. While the Czech Republic slipped into recession in the second half of 2011, Hungary’s economy rose slowly and Poland's GDP growth was robust. Output contracted 0.3% q/q in the final three months of 2011 in the Czech Republic from the third quarter, when it fell 0.1%; in Hungary, output rose 0.3% following a 0.4% increase. Although the Polish statistical office didn’t provide preliminary quarter-over-quarter estimates, the economy likely grew 4% y/y in the fourth quarter, down from 4.2% in the previous stanza. Author: Tomas Holinka and Anna ZabrodzkaDate: February 22, 2012
The U.S. economy is improving. Manufacturing is growing stronger, construction has turned the corner, vehicle sales are posting healthy gains and, most importantly, the job market is gaining traction. Two million payroll jobs were added on net during the past year and the unemployment rate is falling quickly. A self-sustaining economic expansion finally appears to be taking hold. Author: Mark ZandiDate: February 15, 2012
Britain’s central bankers opted to extend quantitative easing at their February policy meeting last week. The Bank of England enlarged its asset-purchase programme by £50 billion to a total of £325 billion. The bank cited a weak near-term outlook, increased spare capacity, and the likelihood that inflation will undershoot its target in the medium term. Author: Melanie BowlerDate: February 15, 2012
While official GDP data have not yet been released, it is all but certain that the euro zone economy contracted in the final months of 2011, a trend we expect to continue through the first half of 2012. The currency union's growth had been sustained earlier in 2011 by its biggest member nation, Germany. Yet Germany's statistical office estimates that its national economy expanded 3% for all of 2011, implying a quarterly contraction of 0.25% in the fourth quarter. Monthly trade data show German exports remained flat from the third to the fourth quarter, while retail sales, an indicator of private consumption, contracted. Author: Enam AhmedDate: February 8, 2012
China’s slowing economy has led to commentary about a hard landing recently, with opinion among economists regarding the country’s near-term to midterm outlook varying widely. We maintain our view of a relatively orderly deceleration. A hard landing remains unlikely, but it is fairly easy to sketch a scenario in which China experiences one.Author: Alaistair ChanDate: February 6, 2012
More than two years after the end of the Great Recession, the global economy cannot seem to shake its effects. Advanced economies are still struggling to grow; unemployment in the U.S. and Europe remains near double digits, and Japan is stuck in a 20-year slump.Author: Mark ZandiDate: January 31, 2012
Financial uncertainty in Europe and the U.S. and slower growth prospects in China, India, and some Latin American economies is causing growth rates to converge around the world. Recent very fast growth in some emerging economies, particularly China, is proving unsustainable.Author: Andres Carbacho-BurgosDate: January 31, 2012
Japan endured a tough 2011, and conditions aren’t getting any easier. The economy staged a strong but brief recovery following March’s disaster, but likely contracted again in the final quarter of 2011. The Bank of Japan describes the outlook as “more or less flat”, which doesn’t inspire much confidence. We can’t rule out a new recession, as the global recovery is shaky and consumer demand is painfully weak. Author: Matthew CircostaDate: January 25, 2012
President Obama spent very little time on housing-related policies in his State of the Union address Tuesday night. While disappointing, it’s not surprising, as the problems are complex, extraordinarily difficult to tackle, and very costly. In his brief remarks, he focused on the right thing: facilitating more mortgage refinancings. The president proposed to allow “every responsible homeowner” the chance to more easily refinance, a savings of about $3,000 annually. Author: Mark ZandiDate: January 25, 2012
The U.S. economy showed some strength as 2011 ended. Real GDP likely grew faster than 3% annualized in the fourth quarter, driven by solid holiday and vehicle sales, sturdy business investment and even some improvement in construction. The labor market has also brightened, with job gains accelerating to about 200,000 per month. This was enough to bring the jobless rate to a nearly three-year low of 8.5%. Author: Mark ZandiDate: January 11, 2012
The Federal Reserve has a set of suggestions to jump-start the moribund U.S. housing market, which is experiencing its sixth year of falling prices. The Fed’s ideas are not new; other agencies and analysts have discussed them extensively since the crisis began. Yet Chairman Ben Bernanke’s entry into the discussion is notable, since many of the proposals require action by entities other than the Fed. That said, even if the central bank’s advice is implemented, its effect on the health and recovery of the market is likely to be limited. Author: Cristian deRitisDate: January 10, 2012
Germany’s economy is the largest in the euro zone, producing 28.5% of the single-currency region's output. As the region's sovereign debt crisis unfolds, its impact will largely determine Europe's economic performance, and consequently Germany's as well, in 2012. While Germany feels the fluctuations of its neighbors' economies via its exports, this effect is lagged. Thus the real German economy has not been yet hit by the sovereign debt crisis: The country's trade surplus narrowed only moderately to €12.6 billion in October from €15.1 billion a month earlier. Author: Petr ZemcikDate: January 5, 2012