It is quite clear that a euro in Germany is not the same as a euro in Greece or Cyprus or even France. This disturbs many people who believe the having a single currency for such diverse countries does not make sense. Moreover, the exchange rate needed for less competitive countries with in the Eurozone is lower than in the more competitive parts.
While the downturn of the Chinese and Greek economies has taken center stage, some international economic watchdog groups fear the United States’ economy may also be in trouble. Though the U.S. economy has shown signs of growth after a slight setback in the early part of 2015, the Organization for Economic Cooperation and Development (OECD) has released its latest figures for national indebtedness, and the numbers do not appear promising for the world’s largest economy.
The Greek government has capitulated on nearly all of European demands, seeming averting an unceremonious exit from the monetary union. The Greek parliament must now pass six reform bills that the recent referendum had appeared to reject.
Developments in both Europe and China will likely encourage risk taking in the days ahead. Our reading of the dollar’s technical condition warns of near-term vulnerability. The yen is likely to underperform as the crosses adjust.
Neither the US economic data nor Yellen’s testimony before Congress will likely alter expectations for one hike before the end of the year. It is possible that by the end of next week, Greece is no longer a key driver of the global capital markets.
Experimental economics is not really a new theory but a (still) relatively new method of studying the kind of questions that economists have studied for ages. However, the addition of the experimental method to the economist’s toolbox is remarkable for at least two reasons.
Unemployment claims jumped in the United States while the Federal Reserve and International Monetary Fund express concerns that global growth is slowing.
The Department of Labor announced Thursday that seasonally adjusted initial unemployment claims rose to 297,000 for the week ending July 4, up 5.3% from the prior week. The four-week moving average for unemployment claims rose to 279,500. The rise was far above most analysts’ expectations.
More people are buying homes in the United States, accelerating price increases throughout the country.
Home prices rose 6.3% year-over-year in May 2015 according to the CoreLogic Home Price Index, marking 39 months of consistent year-over-year increases in house prices throughout the country. Thirty-three states saw home prices at record highs, although the index overall remains below the 2006 peak.
The Organization for Economic Co-operation and Development (OECD) has noted that growth will likely slow across many of the world’s largest economies, including the U.S. and China. The organization released its warning based on an analysis of information available from May 2015. The latest indicators show slowdowns that could lead to a disappointing year for the global economy.
The global capital markets have stabilized. Chinese and Japanese shares initially sold off, but both recovered. Chinese officials have thrown everything but the kitchen sink at the stock market in hopes of stabilizing it. There was some success today. The Shanghai Composite finished 5.8% higher and the Shenzhen Composite was 3.8% higher.
The U.S. is importing and exporting fewer goods while the demand for workers rises to a record.
