There is now a real risk of a technical recession in Germany. Manufacturing orders fell again in August, yet another sign that the economy is losing steam. These latest developments are putting more pressure on the government to bring in fiscal stimulus.
Uncertainty surrounding Brexit is weighing on the UK economy. The services sector has moved back into contraction territory, following in the footsteps of the manufacturing and construction sectors. It is still difficult to predict how Brexit might pan out – the divorce deadline is fast approaching and Boris Johnson’s most recent proposal has received a cautious reception in Brussels.
Although they fell short of expectations, September job creation figures in the USA were high enough to keep the economy at full employment. Unemployment dropped to 3.5% – its lowest level in 40 years – and wage growth remains under control, which means the Fed can keep loosening monetary policy without having to worry about a spike in inflation.
Central bankers and politicians play currency games
USA: No recession in our scenario
To go deeper
Consumer spending is holding up well in most countries, but the same cannot be said of manufacturing output, which has been waning almost everywhere. However, there are some early signs of a rebound. International trade should also pick up now that the USA and China have come to a truce. But geopolitical tensions have not totally disappeared, and we'll have to keep a...
The risk of a large-scale military confrontation between the US and Iran has faded. As we said last week, neither side seems to want a war. But Iran was expected to retaliate after the US army killed General Soleimani in a targeted strike ordered by Donald Trump. And Iran did indeed take action, although it was more a matter of saving face. Iran almost certainly made sure that no American lives were lost, as that would probably have put both countries on a warpath...
Last year ended on a positive note for geopolitics, as a truce was reached in the US-China trade war. However, 2020 has started with an increase in tensions in the Middle East. Once again, Donald Trump was in the middle of it all and played a key role in the fresh hostilities against Iran, a country that has regularly been a target of Trump's threats since he came to power...