Economy in Brief

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.

The INSEE household confidence indicator in January 2025 rose to 91.7 from 88.6 in December; the index sits now at a three-month high; it's still below its October level of 93.5.

• Living standards over the next 12 months are expected to show improvement as the reading moves to -47 in January from -58 in December. • Unemployment expected over the next 12 months is lower with a net diffusion reading of 47 in January compared to 54 in December.
• Price developments show expectations for weaker inflation ahead over the last 12 months. Past price developments move from a reading of three in December to two in January. Looking ahead to the next 12 months, the reading falls to -43 from -33, a significantly weaker outlook for inflation. • The ability to save over the next 12 months is unchanged in January compared to December. The favorability of the savings environment is slightly better at 38 in January compared to 34 in December. • The favorability of the environment for making a major purchase is slightly better but little change, with a reading of -28 in January, up from -29 one month ago. • And the financial situation over the past 12 months as well as the next 12 months is improved slightly from what it was in December. Over the past 12 months, conditions were assessed at -22 compared to -23 a month ago; over the forward-looking next 12 months, the outlook has a reading of -10 in January, an improvement from -14 in December.

Some monthly improvement but still a weak report On balance, however, the household confidence index is weak. We rank it among its various values since January 2001 (Rank % column); the ranking is in its 36th percentile, barely above the lower one-third of its historic queue of data. Living standards over the next 12 months mark a 27.6 percentile standing while the expectation for unemployment over the next 12 months is a relatively high 67-percentile, leaving it in the top one-third of its historic rankings – an uncomfortable level for ‘expected’ unemployment. Note that it does not mean that two-thirds of the respondents expect unemployment. The ranking just means that whatever the level of unemployment that is expected that expectation is higher only about one-third of the time.

Price developments showed that over the past 12 months, the inflation expectation stood in its 52.5 percentile. However, looking ahead, that has dropped-down to its 18.6 percentile; a significant improvement in the outlook for inflation.

The favorability and ability to save over the next 12 months are both high readings and their high, 97th percentile responses to this question, often indicate economic impairment. When the rankings are high for savings, conditions are often under stress. The favorability to spend to execute a major purchase improved slightly month-to-month, as we saw above, but has only a 20-percentile standing, a lower one-fifth reading for the favorability to spend.

The financial situation over the last 12 months had a 54-percentile standing; looking ahead to the next 12 months, it seemed to be slightly weaker with a 48-percentile standard, slightly below its historic median.