Introduction to the Economy
The US and eurozone economies have been experiencing a resurgence in growth, with the US economy expected to grow at an annualized rate of 3.9% in the third quarter. However, this growth has been met with skepticism, with some experts questioning whether it is sustainable. The eurozone economy, on the other hand, has been showing signs of improvement, with the latest data indicating that job creation is picking up pace.
The Walking Debt
One of the major concerns for the economy is the walking debt, which refers to the high levels of debt that many countries are carrying. This debt can be a major burden on the economy, making it difficult for countries to invest in other areas. The French fiscal horror show is a prime example of this, with the country struggling to manage its debt. However, the situation is not as dire as it was previously, with markets no longer spooked by the prospect of French debt.
Interest Rates and Inflation
The European Central Bank (ECB) is expected to keep interest rates low, with some experts predicting another rate cut in the near future. This is due to the low levels of inflation in the eurozone, which have been below the ECB’s target rate of 2%. The ECB has been using quantitative easing to try and stimulate the economy, but so far, it has had limited success. In the US, the Federal Reserve is also expected to cut interest rates, despite the strong growth in the economy. This is due to the low levels of inflation and the risk of a recession.
Economic Growth and Job Market
The US economy has been experiencing strong growth, but the job market has been a cause for concern. The latest data has shown that the jobs market is weakening, with a broad range of indicators suggesting that the risk of job losses is mounting. This has led some experts to question whether the Fed needs to cut interest rates at all. The eurozone economy has also been experiencing weak growth, with the latest data indicating that GDP growth is likely to be around 0.1% quarter-on-quarter.
THINK Ahead in Developed Markets
The Federal Reserve is widely expected to cut interest rates by a further 25bp this week. The economy looks in decent shape, but the risks to the dual mandate of price stability and maximum employment are starting to shift. In the eurozone, the ECB meeting is expected to be a non-event, with the bank likely to reaffirm its "good place" stance. The Bank of Canada is also expected to cut interest rates by a further 25bp this week, despite recent firmer jobs and inflation data.
THINK Ahead in EMEA
In Poland, the October Flash CPI is expected to show a slight increase in inflation, mostly due to energy prices. In Hungary, the Q3 GDP growth data is expected to show a negative performance, with all sectors except services expected to negatively impact economic performance. In the Czech Republic, the economy is likely to have maintained solid annual real growth in 3Q25, with household consumption remaining the main driver of expansion.
Key Events Next Week
The key events next week include the Federal Reserve interest rate decision, the ECB meeting, and the release of Q3 GDP growth data in Hungary. These events are expected to have a major impact on the economy, with the potential to influence interest rates and inflation.
Conclusion
In conclusion, the economy is experiencing a resurgence in growth, but there are still many concerns that need to be addressed. The walking debt, interest rates, and inflation are all major concerns that need to be monitored closely. The job market is also a cause for concern, with the risk of job losses mounting. The key events next week are expected to have a major impact on the economy, and it will be important to watch them closely. Overall, the economy is still facing many challenges, and it will be important to continue to monitor it closely in the coming weeks and months.
