Technical Analysis

ECB’s Lane: If there is a recession underway, it is at the mild end

Greg Michalowski

ECBs Lane

ECBs Lane:

  • If there is a recession underway, it is at the “mild end”
  • More resilence than many might expect in the European economy
  • Labor market momentum a sign that Europe is not seen facing a big contraction
  • Expect a fairly big drop in inflation this year
  • If easing of energy prices persist, it should feed into less pressure on food and core inflation
  • Seen a sizeable decline in real wages
  • Ongoing wage negotiations will begin to make up for that, could put upward pressure on prices in coming years.
  • Policy decisions will be data dependent, but any type of simulation shows rates need to be above 2%

The US and Canada jobs reports this morning help to paint the same employment picture in each country. How can you have a recession with Unemployment rates near historic low levels.

The confusing part of it is at the same time that there are the headlines of layoffs especially at the big cap, the overall picture is still strong.

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