Wednesday, November 23, 2011

Weekly unemployment claims show continued improvement

As both these charts show, the trend in weekly unemployment claims remains down, and that reflects positively on the health of the U.S. economy. No sign of a double-dip recession here.

The real question, of course, is whether the U.S. economy's growth path—which is hardly robust—can withstand the deterioration going on in Europe.

As this chart shows, Eurozone stocks have really been clobbered relative to U.S. stocks in the past year (down by about one-third), and the Eurozone sovereign debt crisis is the most likely culprit. The chart also shows that the big trends in Europe and the U.S. have a strong tendency to coincide. (Actually, all major economies tend to move in synch these days.) I'm tempted to think that Europe's problems are fairly unique, and that a sovereign debt default or two will not result in a serious deterioration in the Eurozone economies. Thus, it shouldn't derail the U.S. recovery. What we have seen so far is a lot of anguish over this question that has not yet translated into any hard evidence of U.S. economic deterioration.


Benjamin Cole said...

Boy, Eurozone stocks off 60 percent from 2000. Is austerity working?

Public Library said...

Seems you are kind of missing the point. The global market is awash in debt (doesn't matter which country), such that there is no way the global debt will ever get repaid.

The market is starting sniff at each successive domino in the game. The result is the same all around so the point is to make money on the way down.

Add up public, corporate, and household debt and the picture becomes clearer.

Benjamin Cole said...

Public Library--

The Euros need to

1) Balance their budgets

2) Print money vigorously.

You are right--with austerity, recession and tight money, they will all default. It will be a disaster.

John said...

Weak economies, such as France, Italy, and Greece have negative trade blalances.

Strong economies, like Germany and Sweden, have positive trade balances. They are export-oriented economies and we should learn from them