Introducing

Robert Brusca

Robert A. Brusca is Chief Economist of Fact and Opinion Economics, a consulting firm he founded in Manhattan. He has been an economist on Wall Street for over 25 years. He has visited central banking and large institutional clients in over 30 countries in his career as an economist. Mr. Brusca was a Divisional Research Chief at the Federal Reserve Bank of NY (Chief of the International Financial markets Division), a Fed Watcher at Irving Trust and Chief Economist at Nikko Securities International. He is widely quoted and appears in various media. Mr. Brusca holds an MA and Ph.D. in economics from Michigan State University and a BA in Economics from the University of Michigan. His research pursues his strong interests in non aligned policy economics as well as international economics. FAO Economics’ research targets investors to assist them in making better investment decisions in stocks, bonds and in a variety of international assets. The company does not manage money and has no conflicts in giving economic advice.

Publications by Robert Brusca

Germany| Apr 11 2025
German Inflation Delights, But Remains Stubbornly High
German inflation was delightfully low in March, falling by 0.2% month-to-month after rising by only 0.1% month-to-month in both February and January. Over the last three months, the German HICP headline pace has fallen, and is contracting at a 0.3% annual rate, compared to climbing 2.6% at an annual rate over six months, and climbing 2.5% at an annual rate over 12 months. This excellent three-month performance, of course, is also embedded in the too-hot six-month and 12-month rates of change. It serves as evidence that, as delightful as the recent data have been, German inflation continues to run over the top of the target set by the ECB for the European Monetary Area.

Domestic CPI The domestic CPI that has a different weighting scheme shows inflation up by 0.2% in March and February, compared to a 0.1% gain in January. The inflation performance for the German domestic CPI is 2.2% over 12 months, 2.7% over six months and 1.7% over three months. It also behaves much better over three months than over six or 12 months; in fact, the 12-month gain in the domestic CPI is even closer to the ECB's desired outcome. Still, the German inflation rate continues to run hot except over three months. Looking at German inflation and its CPI excluding energy, which was up 0.3% in March, compared to 0.2% in February, and no gain in January. The inflation sequence for German domestic inflation excluding energy is 2.7% over 12 months, 2.7% over six months, and then down again to 1.7% over three months.

Germany displays improved and in fact acceptable inflation over the last three months; however, over a broader timeline, it still isn't good enough for the target that the ECB has for the EMU area. Still, if we look at diffusion statistics which assess the breadth of inflation acceleration across periods, we see the diffusion over 12 months is only 27%, over six months it's only 36%, and over three months it's only 36%. Diffusion at 50% would indicate acceleration and deceleration are balanced. But with diffusion below 50%, that's telling us that inflation is actually decelerating across more categories than it's accelerating. Germany displays impressive decelerating statistics across these categories for 12-months compared to 12-months ago, for 6-months compared to 12-months, and for 3-months compared to 6-months. The reality is that inflation continues to overshoot, that is simply the reality that inflation is stubborn in several important categories where it refuses to fall enough to register the desired result of 2% overall.

However, very clearly inflation in Germany is not running away. It is slightly excessive, and the overshoot depicted by the domestic headline at 2.2% would probably be acceptable in these times, but the overall 2.5% for the HICP and for the CPI excluding energy at 2.7% are still excessive.
by:Robert Brusca
|in:Economy in Brief
Europe| Apr 10 2025
European IP Still Mixed Across Early Reporters
The overall assessment of EMU-wide IP is not yet possible. But a slew of early reporters (eight in this table) along with two northern European countries have issued reports on manufacturing production in February. They are mixed in February with four up, and four down. January has five ups and three downs. December has five down and three up. So, the numbers cluster around 50-50 with some variation. The Northern European countries are showing monthly gains except for Norway in December.

The sequential trends showing growth rates over three months, six months, and 12 months, show three EMU nations with output falling and five increasing over three months, then four have output up and four down over six months. Over 12 months, five countries have output down and three with output up. The sequential growth rates do show a trend toward having more nations with expanding output. Germany, Finland, and Greece show decline on all three horizons. France shows output declines over six months and 12 months while Spain shows a decline only over 12 months. The northern European countries of Sweden and Norway log increases on all horizons.

From 12-months to 6-months to 3-months, the EMU median reading steadily progresses to a stronger reading. The median change at an annual rate is -0,7% over 12 months, -0.3% over six months and +3.0% over three months. Monthly data do not give a ‘clear look’ at trends. In December, the median output change on month-to-month data is -0.7%, which shifts sharpy to a gain of 0.9% in January. February saw the median also post an increase, a bit weaker than January at 0.3%. Still, it was an increase, and it was better than the December rate of -0.7%.
by:Robert Brusca
|in:Economy in Brief
Japan| Apr 09 2025
Japan’s Confidence Falls and Stays Low
Japan’s confidence is still weak and in a down cycle. Since reaching a sharp peak early in 2024, confidence continues to recede. All components are showing decline on all horizons from 12-months to 6-months to 3-months. This is an extremely uniform response.

Consumer confidence has a 15-percentile standing on data back to 2004. Components of the confidence index has standing that range from a standing at the 47.8% mark for the valuation of assets to a low at the 6.1 percentile mark for willingness to purchase durable goods.

In keeping with this weakness, the overall livelihood standing is at its 10.2 percentile.
by:Robert Brusca
|in:Economy in Brief
Japan| Apr 08 2025
Japan’s Economy Watchers – Conditions Sag
Japan’s Economy Watchers Index saw its current and future indexes fall and indicated contraction in March. We can only imagine the knock-on effects of impending U.S. tariffs on these perceptions and expectations in the months ahead.

As it stands, Japan’s economy watchers survey show month-to-month attitude deterioration in their diffusion responses up and down the line. For the current conditions survey, entries erode except for eating & drinking places, manufacturers, and services. For the future index, all the responses are weaker month-to-month except for housing, corporations, and manufacturers.

In terms of percentile standings on survey responses from March 2004 to date, only one category in the current or future services, current manufacturers, has a reading above the 50% mark making it the lone response above its historic median on this timeline. It achieves this ‘milestone’ with a diffusion reading of 47.8, that nonetheless indicates contraction. Manufacturers also have the highest diffusion ranking in the future survey but at the below median 46.2 percentile mark; the topical diffusion reading of 47.4 indicates ongoing contraction.
by:Robert Brusca
|in:Economy in Brief
Germany| Apr 04 2025
German Orders Fall
German orders came up flat in February after falling by 5.5% in January. It's been a turbulent period for orders. The January drop came after an increase of 5.6% in December, so orders have been chopping around the last few months and are not really going anywhere. Foreign orders rose 0.8% in February after falling 0.5% in January and being flat in December. Domestic orders fell 1.2% in February after falling by 12.1% in January but that had followed a 13.9% increase in December. Once again, there is a lot of volatility and little trend.

The trend path for orders looking at 12-month, 6-month, and 3-month growth shows not much stirring. Total order orders fall 0.2% over 12 months; they rise at a 2.7% annual rate over six months and then fall at a 0.9% annual rate over three months.

Foreign orders rose 0.1% over 12 months; they were up 1.9% at an annual rate over six months and they rose by 1.4% at an annual rate over three months. Foreign orders are showing some sustainable growth over three months and six months although they have very little to show for it over 12 months. Domestic orders fall by 0.9% over 12 months; they gain at a 3.5% annual rate over six months and then fall at a 4.3% annually over three months. Domestic orders display the same kind of volatility that we see in the headline overall and not the tendency toward creeping growth that we see looking at foreign orders. Moreover, the domestic series updates with a 3-month growth rate that's negative which is not encouraging. Real sales data show a small increase in February of 0.2% for manufacturing after falling 1.0% in January and rising 0.8% in December. The sequential growth rates hint at some improvement but not much with a 3% decline over 12 months, a 0.4% decline at an annual rate over six months and then a swing to positive growth at 0.4% at an annual rate over three months; this is creeping and good news, but it's very moderate growth.

Industrial confidence measures for Germany, France, Italy, and Spain the four largest economies in the European Monetary Union, show a modest improvement from January to February in Germany and in France, unchanged conditions in Italy, compared to some slight slippage in Spain. Viewed sequentially, the industrial confidence data don't show much movement from 12-months to 6-months to 3-months for these countries; Germany and France get slightly weaker; Italy and Spain have even smaller moves although they also get slightly weaker. The rankings on the levels of these industrial confidence measures in February give us rankings that are below the 50% mark, putting them below their median for all four countries. The reading for Germany is the lowest with 5.9 percentile standings; the others have rankings between the 20th and 40th percentile on that timeline.

The data on orders in real sales on a ranking basis we find overall orders and domestic orders are moderate-to-weak with an overall order of ranking in the 53rd percentile compared to a domestic ranking at the 25th percentile and foreign orders have a firm 71.5 percentile standing. These calculations are based on the levels of orders. Then expressed in terms of growth rates, these three orders metrics have rankings between their 36th and 40th percentiles putting them below their median growth rate for the period. Real sector sales, for manufacturing sales for example with a 48-percentile standing based upon the level of sales, logs a 19-percentile standing based upon the ranking of its year-over-year growth rate.
by:Robert Brusca
|in:Economy in Brief
Global| Apr 03 2025
Global Composite PMIs Move Sideways
The composite PMI readings for March show 19 readings by month or time segment. In March nine of those get worse month-to-month. Six jurisdictions are below 50 indicating overall economic contraction; those six are France, Russia, Hong Kong, Japan, Zambia, and Egypt. This compares to only two below 50 in February (France and Hong Kong) and four in January (France, Italy, Brazil, and Singapore). These lists demonstrate it is not like these countries are mired in contraction; countries seem to come and go from the category of contraction except for France that contracts in all three months as well as over three months, six months and 12 months, based on average values. Hong Kong contracts in March and in February as well as over three months on average and on average over 12 months, but not over six months. Egypt contracts over three months, six months, and 12 months as well.

However, the above are the exceptions From January 2012, the average percentile standing for the 19 countries in their respective data queues as of March 2025 is a reading of 46.1%. But the median reading among all these standings is at 50% which marks the overall median. These factors suggest that the overall health of the global economy based on the composite readings here is near its median.

Sequentially, nine reporters are weak over three months compared to six months, then twelve are weaker over six months compared to 12-months, and three them are worse over 12 months compared to their averages of 12-months before.

Ten reporters have rank values above 50%, which places them above their respective individual medians.

The strongest rankings are 83.3% for Nigeria and 78.6% for Egypt. The weakest readings are 4.8% for Japan and 9.5% for Hong Kong. Among the U.S., EMU, Germany, The strongest rankings are 83.3% for Nigeria and 78.6% for Egypt. The weakest readings are 4.8% for Japan and 9.5% for Hong Kong. Among the United States, EMU, Germany, France, Italy, Spain, and the United Kingdom, the average standing is at 48.6% and the median is 54.8%. Only France, Italy and the U.K. have standings below their respective 50% marks on composite readings for this grouping of advanced economies- of course, we just saw Japan was much weaker.
by:Robert Brusca
|in:Economy in Brief
Global| Apr 02 2025
Global MFG PMIs Erode in March
The median reading for the 18 early reporting manufacturing sectors in the table (17 countries plus the euro area) is lower in March at 48.7 from 49.5 in February. Also, in March the diffusion (breadth) of reporters showing month-to-month improvement fell to 33.3% from 66.7% in February and 61.1% in January. However, diffusion over broader periods (3-mo vs. 6-mo; 6-mo vs. 12-mo and 12-mo vs. 12-mo ago) shows diffusion has been steadily at and above the 60% mark (them as point-to-point diffusion changes). And on those timelines, the median reading for the 12-month average is at 49.8, the 6-month average is at 49.3, and the 3-month average is at 48.7. Despite improving diffusion, the median reading has been slipping, but the slippage has been extremely slow. For the United States, France, Germany and the euro area - as a block - these three, blocs of time show diffusion improving in 10 of the twelve segments, the two deteriorating segments are for comparison with a year ago in the U.S. and comparisons between the 6-month average and the 12-month average for France. All four reporters show improvement in three-months compared to six-months, based on average data. By comparison, the four BRIC countries show only two improvements among the 12 possibilities, and only India shows improvement in three-months compared to six-months.

According to breath, this is ongoing improvement. But median data are not confirming the trend. It’s just another example of how small the current changes are and how the data can show small changes over periods as long as a year, when in reality all we are experiencing are gyrations, and little change in an essentially static environment.

The queue standings (rankings) show only seven of 18 reporters at or above the 50% mark; this is the demarcation line for the median on these ranked data. So, over the last four years data, are arrayed with slightly less than half above and slightly more than half below their respective medians. However, the median reading of these rankings makes it clear that data tilt to the weak side at a 45-percentile standing. On data from January 2021 to date, all March 2025 readings are lower on balance (except India-and that exception is on a small margin, +0.3 points).

In that table, I look at various groups: BRICS, Asia, and a group of the more advanced countries (U.S., U.K., EMU, Canada & Japan); each of them shows very little movement.

However, we have a world with a great deal of change in train, especially changes thrust on Europe by changing U.S. policy to put more of Europe’s own security provision in Europe’s on hands. This is going to ramp up spending and should cause economies to heat up in the year ahead or more. Such a change could spur PMI values, economic growth, stimulate the inflation environment, and alter monetary policy itself. There is change in progress that we can see coming but has not been reflected in this month’s report.
by:Robert Brusca
|in:Economy in Brief
Japan| Apr 01 2025
Tankan Bellwether Edges Down
The large industrial companies that form the most important vanguard readings for this report are the weakest in the first quarter with manufacturing backtracking to reading of +12 from +14 in the fourth quarter. That +12 reading is below its four-quarter average of +13.0. Large nonmanufacturing firms, however, stepped up with a reading of +35 in the first quarter up from +33 in the fourth quarter to the highest standing since the third quarter of 2006, which is the period over which we rank these data. The large manufacturing bellwether reading has a 66.7 percentile standing, while the total industry reading is static at +23 for the first quarter with the percentile standing and its 97th percentile.

The outlook for large manufacturing companies also stepped back to +12 in the second quarter from +13 in the first quarter. Its four-quarter average is +13.3 and that leaves it with the ranking at its 67th percentile quite similar to the current reading for the first quarter for manufacturing. Nonmanufacturing remained at a reading of +28 for the third quarter in a row; this is a second-quarter of 2025 reading; it's one-year average is +27.8 and at +28 this is also the highest outlook reading for nonmanufacturing on this timeline. The total industry reading has an outlook in the second quarter of +20.0, the same as the first quarter, down slightly from the fourth quarter; it compares to a four-quarter average of +20.3 and has a queue percentile standing in its 92nd percentile.

The outlook readings, for the most part, are firm-to-strong. Unfortunately, the manufacturing readings are the weakest; instead of being on their 90th percentile like the total industry and nonmanufacturing, manufacturing readings have 66th percentile standing which leaves them only at the lower border of the top third all readings since 2006.

Nonmanufacturing industries show the strongest readings with 90th percentile standings for transportation, restaurants & hotels, wholesaling, and services for businesses. Among the other reporting nonmanufacturing sectors, the standings are in their 80th percentiles or higher except for personal services that has a softer 70th percentile standing.

Compared to the period just before COVID, all sectors are higher except for services for businesses and personal services that are each one or two points lower than they were in the fourth quarter of 2019 before COVID struck. The strongest advances from the pre-COVID reading are from restaurants & hotels with the 35-point rise in their index, as well as retailing, and real estate each with 24-point increases in their respective indexes; wholesaling has a 22-point rise in its index. Large firm manufacturing overall has a 12-point rise in its index on that timeline while construction has an increase of only two points.

The responses for medium- and small-sized firms are not considered to be harbingers in this survey, but for manufacturing both medium- and small-sized firms have rankings in their low 80th percentile while the nonmanufacturing rankings have standing in their 97th and 98th percentile. However, the outlook for medium- and small-sized firms carry percentile standing in their 70th percentile for manufacturing. There still are readings with rankings in the high 90th percentiles for the nonmanufacturing sector that continues to be quite strong across Japan regardless of the size of the firm reporting
by:Robert Brusca
|in:Economy in Brief
Europe| Mar 31 2025
Some Hopeful Signs in European Inflation Trends; But Are the Signals Good Enough Given the Circumstances?
The Circumstances- The chart of the three largest EMU economies and their HICP inflation rates shows clearly that year-over-year trends and inflation in France have broken lower while Italy, that has long had the lowest inflation rate in the monetary union among the four largest economies, is on a mild uptrend. Germany has made a very small re-set as inflation has broken lower in the short-run, but German inflation year-on-year actually would still appear to be in a slight uptrend.

There is good news- Despite these broader views, there is some excitement over this month’s inflation statistics from Germany. German inflation has fallen by 0.2% in March after rising by only 0.1% in February and in January. The annual rate change for inflation in Germany over three months is -0.3% which compares to France at -2.1%. These are clearly good inflation developments for the two largest economies in the monetary union; however, Italian inflation over this period is at a 5.7% annual rate while Spain's inflation is at a 1.2% annual rate. Among the four largest monetary union economies, three of them have short-term inflation rates well inside of the ECB's targeted pace for the union as a whole; however, the picture is far from completely clear.

There are reasons to be cautions in digesting the ‘good news’ - Italy shows a clear acceleration for inflation from 2.2% over 12 months to 2.8% over 6 months to a pace of 5.7% over 3 months; that acceleration is uncomfortable. For Germany, the year-over-year inflation is in excess of the EMU-wide target at 2.5%, and still excessive at 2.6%, and accelerating slightly over six months, but then it breaks sharply lower over 3 months to that -0.3% pace. France has relatively clean results with a one way read on inflation. Over all horizons, inflation’s pace is below the 2% mark and decelerating to boot running at a 0.9% annual rate over 12 months, followed with a 0.2% annual rate over 6 months, and then clocking -2.1% at an annual rate over 3 months. Spain is a good example of the mixed situation for European inflation as over 12 months it's 2.3% pace is slightly above the 2% that the ECB seeks for its EMU-wide target; over six months Spanish inflation steps up to a 3.4% annual rate, clearly excessive on everyone's radar, but not really worrisome, then, over 3 months, Spanish inflation settles down to only 1.2% at an annual rate- highly copacetic.

The inflation overview: numbers and their trends- Summing up what we have here are three countries with 12-month inflation above the 2% pace. France is below it at 0.9%. We also have three countries with inflation above the 2% pace over 6 months with France as the exception again at only 0.2% over 6 months. In addition to that, two of the three countries show acceleration over 12 months compared to 12-months ago, and over 6 months compared to the 12-month pace, inflation accelerates in three of these four countries. It's possible to look at these data and find good news; however, it's also possible to look at these data and find that the news does not appear to be quite so good.

Beyond the headlines- Turning to the core inflation rates for Italy and Spain, we see that both of the core rates for those two countries are at 2% over 12 months within the ECB's desired parameters and a green light for any pending rate cut decisions. Italian core inflation runs at 1.9% over 6 months with Spanish core inflation at 1.7% over 6 months also acceptable paces to the ECB. Over 3 months the Italian core picks up to 2.4% annual rate while the Spanish score remains at 1.4% and as part of a decelerating process for Spanish core inflation from 12-months to 6-months to 3-months.
by:Robert Brusca
|in:Economy in Brief
Europe| Mar 28 2025
EU Indexes Show Slight Erosion
The EU commission's overall reading for the European Monetary Area unexpectedly eroded, dropping to 95.2 in March from 96.3 in February, leaving it also below its January 2025 level but above its December 2024 level. It may simply be too soon for this survey to reflect any of the changes going on in Europe. But very clearly a ramp up in military spending is planned and economic conditions in the monetary union and beyond are about to receive a significant boost. While that development might be simply too new to have gotten into the indexes as of March, it is still in train so curb your disappointment.

EMU in March by Sector March readings for the monetary union show the industrial sector unchanged at -11 from February but showing improvement compared to both the December and January readings. Consumer confidence slipped in March to -14.5 from -13.6 in February and it's below its January and December levels as well. Retailing slipped to -7 in March from -5 in February and it also is below its string of readings since December of last year. Construction spending at -3 posted the same reading it logged in February and in January and those were slight improvements from December. The services reading in March slipped to +2 from +5 in February and it is also below its reading of +6 in January.

Country Readings Country level data show readings for 18 of the monetary union members; of these 18, only 6 have percentile standings for overall indexes that are above their median (a ranking of 50%) calculated on data back to 1990. Only one of the four largest countries has a reading above its median and that's Spain at a standing at 51.4% Other large countries show much weaker readings with Germany at a 16-percentile standing, Italy at a 37-percentile standing, and France at a 37.5 percentile standing. Month-to-month changes show deterioration in nine of the 18 reporting countries. This compares to a deterioration in eight in February and compares to January when six weakened relative to December. It is a worsening trend but based on developments in military spending to shore up NATO. Europe supported defense systems must carry more of the load. This will imply stimulus across the board coming for the monetary union.
by:Robert Brusca
|in:Economy in Brief
Europe| Mar 27 2025
Euro Vehicle Sales Falter and Flatten in February
European vehicle registrations falter and flatten in February. The month-to-month changes for a decline of 0.9% in February; year-over-year vehicle registration growth is -3.9%. The chart makes it clear that country-by-country the growth rates have been closing in on fairly unchanged levels of activity with a slight bias to contraction.

Country-by-country year-over-year sales results are strongest for Spain with the 10.4% increase, France with the 1.7% increase, the United Kingdom with a 2.4% drop, Italy with a drop of 6.2%, and Germany with a drop of 7.1%. These numbers translate into a 3.9% decline year-over-year for the total. If we look at smoothed data updated from three-month moving averages, there's a decline of 1.4% year-over-year, just to get a less volatile read.

Despite the year-over-year declines that are more prevalent than increases, the sequential trends show vehicle registrations trending more toward acceleration. There is clear acceleration registered in Italy and the United Kingdom. After that, there's certainly a very strong hint of very strong acceleration in both Spain and France. I say that because the year-over-year gain for Spain is 10.4%, while the three-month gain goes up to 32.1% at an annual rate (!); however, that is a step-down from the six-month growth rate of 47.6% at an annual rate so it's not exactly a clear accelerating trend but certainly three- and six-month growth rates are far in excess of the 12-month growth rate. We see the same thing happening in France with a 1.7% year-over-year growth rate compared to a 23.1% annual rate over three months, but that three-month rate is a step-down from the six-month pace of 27.7%. Because of that, I can't classify those two countries as accelerating but clearly something very positive is a foot.

If we turn to look at ranked data, we find the ranking of year-on-year sales growth is at 20.2% overall growth rates since 1995 – weak and unimpressive. Country rankings range from low 7% rank for Germany to a high of a 46-percentiel standing in the U.K. All rankings are below 50%, below their respective historic medians. We can also rank the same data in terms of the pace of unit sales. In Europe, the pace of unit sales (units sold per month or per month at an annual rate) there is a 33-percentile standing on all unit sales data since 1995. The auto sector pulled back after the Great Recession, it recovered into Covid, then suffered further downward pressure after the invasion of Ukraine by Russia. Since then, there has been a much more modest recovery leaving the pace of unit sales closer to the lows reached after the Great Recession than to its pre-Great Recession mark. Europe’s auto sector may be recovering but it is doing so slowly and sporadically, and it has a long way to get back to trend.
by:Robert Brusca
|in:Economy in Brief
France| Mar 26 2025
French Household Confidence
In March, household confidence in France sank after rising in February. The index now resides below its level in January. Since early in this new millennium, confidence resides at its 36.2 percentile, a standing that is just above the lower one-third of its queue of outcomes over that period. The median result lies at a ranking of 50%. The mean level for confidence over this period is 96.5. Living standards for the next 12 months are weaker at -50 compared to -47 in February. The past standard has a standing in its 32nd percentile while the period ahead registers an expectation with a rank standing in its 21.9 percentile, just above its lower one-fifth mark.

In March, the evaluation of past living standards over the past 12 months improved very slightly to -69 from -70.

Among the good news in this survey is the drop in unemployment expectations in March to 46 from 54. Still, unemployment expectations rank at their 63.1 percentile which is above their median and mean - the mean for unemployment expectations is lower at 33. So, the good news is that unemployment expectations have fallen, but the bad news is that they are still elevated.

There is good news on price developments. Expectations for a drop increased in the March reading in the past 12 months; they increased to -7 from -5. The March reading has a 43.9 percentile standing, below its mean and its median. Looking at the next 12 months, inflation expectations are a touch less optimistic at -41 in March compared to -43 in February. The ranking for 12-months ahead has a very low standing at its 22.6 percentile, marking the small giveback in expectations in March as inconsequential.

The environment for saving and being able to save are both little-changed month-to-month and both also have extremely high standings in the high 90th percentile.

The favorability of the environment for making major purchases improve slightly in March continuing a modest trend higher. Still, spending favorability ranks as weak in its lower 26.2 percentile.

The financial environment was little-changed in its evaluation of the past 12 months; but looking ahead, a sharp deterioration to -11 was posted for the next 12 months compared to a reading of -4 in February. The financial situation over the past 12 months has an evaluation with a standing in its 60.1 percentile, above its historic median, but switching to an outlook 12-month ahead yields a rank standing in the 44.5 percentile just below its median and one point below its mean.

Since Covid and Since the Russian Invasion The final two columns show changes in survey responses since before Covid stuck and since the Russian invasion of Ukraine. We do this in two-steps looking at the change from levels just before Covid struck to the threshold of the invasion, then from the invasion to the up-to-date readings. From Covid, things were improving to early 2022; then since the invasion, consumer conditions are worse by 4 points. Expected living standards rose 8.5 points into the Covid recovery but since the invasion conditions are 11.9 points lower. Unemployment expectations were higher by 14.2 points in early 2022 but after the invasion they rose sharply by 62 points! Post Covid eventually inflation expectations were reduced. They were lower by 9.7 points in early 2022 but since the invasion they are lower by 30.9 points. Post Covid the spending environment was higher by 11.1 points but since the invasion that response has reversed by 9.9 points.

On the plus side of things, financial conditions ahead are 2.0 points higher since the invasion, previously they were 3.5 points higher in early 2022 in the pre-invasion Covid recovery.

The bottom line to all this is that there has been a digging out after the Russian invasion but that post Covid recovery process has now seemingly run out of steam. The forward-looking inflation expectations are still on a slow improving path but that may have stalled. In any event, the turn to more military spending in Europe could make a marked change in Europe’s inflation environment and could alter future surveys considerably.
by:Robert Brusca
|in:Economy in Brief