Eurozone vs. United States: Fight To The Data

In the last week the same market movers have been published for two different continents. These continents are those who are most under fire: Eurozone and United States. Their analyses will help to decide who the winner between Europe and United States is (at the moment).

The macroeconomic data of this week for the EU and the US were: GDP, consumer price index (inflation / deflation) and unemployment rate.

The Eurozone GDP, for the first quarter, reported a change of +0.6%, thus beating expectations placed at + 0.4% and + 0.3% in the previous saw. The first quarter GDP calculated on an annual basis reported an increase of + 1.6%, beating the consensus seen at 1.4% and resulting in line with the precedent set at 1.6%.

The preliminary inflation in the Eurozone for the month of April showed that the consumer price index was estimated at -0.2%, down compared with 0% of last month.

Rather surprisingly, the unemployment rate in March, index that compares the performance data on the labor market in all the countries from the Eurozone. The Eurozone unemployment rate falls unexpectedly in March to 10.2%, down from the result of the previous month to 10.3%.

As for the United States, the consumer price index for the first quarter of 2016 marked a + 0.7%, correcting upward the forecasts analysts (+ 0.6%) but worse of the previous figure at + 0.9%.

In the first quarter of 2016 the United States grew by an annualized 0.5%, compared with the end result of the fourth quarter at + 1.4%. Analysts expected a growth of 0.7% US GDP.

Applications for initial unemployment benefits in the US recorded last week a total of 257,000 units against the previous 248,000 units.

So far, so good, but how will you take it if we say that the Eurozone is growing more than the United States?

Looking at the last data of the growth of both areas, for the first three months of this year, we get to one conclusion: EU beats USA.

Monetary policies, low energy costs and a slight increase in consumption seem to be a definite plus for the Eurozone economy, at least in this early part of 2016, while the Federal Reserve holds down their intentions.

To analyze the possible reasons for the lead, just re-read the above data.

Eurozone economic growth marked a + 0.6% in the first quarter of 2016 compared to the previous one, beating the United States with easiness (+ 0,5%).

The growth was equal to twice of the previous six months and above of the expectations of analysts.

The unemployment rate also seems to have fallen to the lowest level since 2011.

The Eurozone seems back on top thanks also to the last bazooka of Draghi and the ECB, to lower energy costs and an increase in consumption. The aforementioned low cost of energy promotes consumer savings, which seem to return to the economy by consumption.

The forecast for the next quarter we might see a slowdown in growth and it will be difficult to sustain.

The slowdown of the world economy, the loss of consumer confidence and the uncertainty that the British referendum will bring in the Eurozone territories could show their weight in the next quarterly measurement, so as to break the advantage that European countries have marked against the USA in the beginning of 2016.

On the other hand, ‘the United States seems to follow its practice of starting the New Year downward. The second quarter will see a general improvement compared to the first one. 

  1. JON 5 anni ago

    Meanwhile, the eurozone has no binding fiscal policy — that buck stops with the individual countries — so it has no equivalent smoothing mechanism.

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