Recent Updates

  • Canada: Wholesale Trade (Nov)
  • US: National Financial Conditions Index (Dec)
  • Ireland: WPI (Dec)
  • Spain: Cement Statistics (Jun), Industry Turnover Indexes, New Orders, Services Sector Activity Index (Nov), Government Debt (Dec)
  • Mexico: Employment (Dec)
  • Turkey: Non-Domestic PPI, External Debt by Lender, Domestic Debt by Holder, Domestic Debt by Instrument, Govt Finance (Dec);
  • more updates...

Economy in Brief

EMU Money And Credit Growth Stumble
by Robert Brusca   October 27, 2010

Global liquidity is going nowhere. In EMU the nominal growth rates for money supply growth have moved up ever so slightly over the past 12-months. The same cannot be said of real money growth. Inflation adjusted credit growth has not picked up and it is essentially zero. Its nominal rate of growth is very weak. Euro-loan growth over three months declines once inflation adjusted; on that basis it is nearly zero Yr/Yr as well.

In other countries money growth is still poor. In the US nominal money growth has moved up a bit, in the UK it is weakening and declining; in Japan it is steady at a slow pace. In real terms US money growth is flat, in the UK it is declining and in Japan, because of deflation, there is a bit more strength and a hint of acceleration.

In a world in which aggregate demand seems flat and consumer spending has been weak, there is little in the way of monetary stimulus. There also is little in this pattern to stimulate corporations to invest. On the other hand it cannot be argued that money growth is so weak it is creating deflation, except in the UK where you do not have it.

Interpreting monetary trends is made more difficult by the fiscal contraction in play across Europe and especially in the UK. Japan is planning some stimulus. The US has engaged stimulus and has unclear plans for the future beyond the probability of a further attempt at quantitative easing, which so far shows little impact on money growth rates. But the US past stimulus was so great that it may suffer some fiscal contraction from the expiration of past stimulus programs even if it does not mount any new efforts.

The upshot is that money growth does not seem to be introducing any new policy risks. The risks to the key global economies, the countries of the monetary center, seem to be from lingering financial sector and real economy issues.

Look At Global And Euro Liquidity Trends
Saar-All Euro Measures (E13): Money & Credit G-10 Major Markets: Money Memo
  €-Supply M2 Credit:Resid Loans $US M2 £UK M4 ¥Jpn M2+Cds OIL:WTI
3-MO 3.8% 2.5% 0.5% 5.0% -1.8% 2.7% -2.5%
6-MO 3.7% 3.5% 3.1% 4.5% -0.8% 3.4% -14.7%
12-MO 2.3% 1.9% 1.9% 3.0% 8.7% 2.8% 7.7%
2Yr 3.2% 1.6% 0.8% 5.0% 9.6% 2.9% -14.9%
3Yr 5.4% 4.7% 3.4% 5.6% 10.0% 2.6% -1.8%
Real Balances: Deflated by Own CPI. Oil Deflated by US CPI
3-MO 1.5% 0.2% -1.8% 2.2% -3.9% 5.2% -5.0%
6-MO 2.4% 2.2% 1.8% 3.9% -2.7% 5.5% -15.2%
12-MO 0.5% 0.1% 0.2% 1.8% 5.5% 3.7% 6.4%
2Yr 2.4% 0.8% 0.1% 5.2% 7.4% 4.5% -14.8%
3Yr 3.6% 3.0% 1.7% 3.9% 6.7% 3.1% -3.3%
Japan's Latest CPI is estimated to complete this table
large image