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Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
Excess Demand for Goods Caused Supply Constraints
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State Coincident Indexes in June 2022
State Labor Markets in June 2022
No Recession Call Can Be Made Before BEA Explains The Record Gap Between Income & Output
by Robert Brusca November 13, 2007
In October, as energy prices have surged again, the Euro area is suffering inflation bulging beyond the limits of its ceiling. We know that the ECB is not happy with this development even though most of it is due to oil prices and core inflation seems less of a problem. Still the ECB makes policy without an explicit reference to core prices unlike the Federal Reserve in the US.
Despite a surging Euro that should help to combat any true inflation forces in the Euro area economy, the ECB remains wary of this over top inflation partly because of the ongoing strong money and credit growth in the EMU. So Europeans find themselves in the sticky position of seeing inflation flare, the central bank remain wary, ready to act, even as their currency value remains quite strong and the competitiveness pressures from that strength are squelching growth and killing Europe’s export orders. The European policy dilemma has become an economic oxymoron: the ECB’s own threat to hike rates is further bolstering the euro and further exacerbating the economic problems within the zone as the ECB does nothing and worries about inflation pressure which worsen.
Euro area & Friends: Headline Inflation Yr/Yr | |||||||
---|---|---|---|---|---|---|---|
Year/year | Mo/Mo | 3Mo: AR | 6Mo:Ar | ||||
Core HICP | Oct-07 | Sep-07 | Aug-07 | Oct-07 | Sep-07 | May-07 | Apr-07 |
Belgium | 2.2% | 1.5% | 1.2% | 0.8% | 0.1% | 3.5% | 2.1% |
France | 2.1% | 1.6% | 1.3% | 0.2% | 0.1% | 2.6% | 2.3% |
Germany | 2.7% | 2.6% | 2.0% | 0.2% | 0.7% | 3.1% | 2.7% |
Greece | 3.1% | 2.9% | 2.7% | 0.4% | 0.3% | 1.1% | 4.0% |
Ireland | 3.0% | 2.9% | 2.3% | 0.2% | 0.3% | 2.3% | 2.5% |
Italy | 2.3% | 1.8% | 1.7% | 0.7% | 0.3% | 4.7% | 3.3% |
Luxembourg | 3.6% | 2.5% | 1.8% | 0.6% | 0.0% | 2.8% | 2.7% |
The Netherlands | 1.6% | 1.3% | 1.0% | 0.4% | 0.0% | 1.5% | 0.6% |
EU: Other HICP/CPI | |||||||
UK(HICP) | 2.0% | 1.7% | 1.8% | 0.5% | 0.1% | 2.7% | 1.5% |