Economy in Brief

Growth in the European Monetary Union (EMU) came to a near standstill in the fourth quarter of 2024 as overall annualized growth expanded at a 0.1% annual rate, the smallest measurable rate that would appear on this table. Among the seven early reporting monetary union members in this table, six of them show growth decelerating in the fourth quarter compared to the third quarter. Overall weighted GDP for the monetary union decelerated from 1.6% at an annual rate in the third quarter to 0.1% in the fourth quarter growth. Growth rates were negative for France, Germany, Ireland, and Italy. However, pooling the four largest economies together produces a growth rate of zero in the fourth quarter compared to 1.1% in the third quarter. Spain’s 3.1% fourth quarter growth rate saves the Big-4 aggregate GDP reading from logging a negative number. Away from the four largest economies, the rest of European Monetary Union saw growth plunge lower to 0.4% at an annual rate in the fourth quarter from a 3.2% annual rate gain in the third quarter.

Growth conditions in the monetary union are poor. Ranking statistics put the performance of GDP growth in context. Only two countries in the table, Portugal, and Spain, have growth rankings above their 50-percentile mark which represents the median for each series over this period. The EMU has a growth rate ranking at its 32.6 percentile; that puts it in the lower third and its queue of ranked data. The four largest Monetary Union economies show a growth ranking in a 28.3 percentile, while the rest of the Monetary Union performs better with the growth ranking in its 40.2 percentile. These statistics compare to the United States that has an above median ranking at its 53.4 percentile over the same period.

Money supply growth globally shows broad acceleration across countries. 12-month growth is faster than it was 12-months ago for every country in the table except the United Kingdom. Compared to growth rates two-and three-years ago, all countries show current money growth is stronger.

Monetary stimulus is in play. Monetary growth also shows shorter-term building stimulus as 6-month growth exceeds its 12-month pace and 3-month growth exceeds its 6-month pace broadly- in all countries except the U.K. In the EMU, this sort of sequential growth is also advancing for credit in addition to for money.

Monetary and credit stimulus is in train – at least nominally.

Real variables, however, show flat to slightly weaker real money growth in the EMU. Similarly, in the EMU, credit growth runs from slightly weakening to flat growth and growth rates that are still negative reveal contracting credit.

Elsewhere real money growth in the United States has transitioned from a contraction in real balances over two years to showing growth and accelerating real balance growth from 12-months to six-months to three-months. However, the growth in real balance effects is not broad outside the United States. U.K. real balance growth remains negative, and it shows real balances shrinking at an increasingly rapid pace. The same is true in Japan where real balance growth is contracting at an increasingly rapid pace. Only the U.S. shows real balances and nominal money growth accelerating.

The most interesting observation here is the finding that nominal money balances are accelerating but real balance growth is weakening or flat except for the U.S. where both show increasing stimulus. Inflation has generally stopped falling and in each country in the table; the 12-month low for inflation is higher than the current year-on-year pace for all countries– and most show at least a minor inflation uptick is in progress.