Hope Beyond Hope That There Will Be an Upturn

Consumer confidence in the US stands at 76.2 in May 2013 (1985=100). That’s an increase from 58.4 in January. The Conference Board’s figures show that things have not looked so good for months. Things seem to be looking up. But, is the US consumer right to believe in the market and that the economy is getting better and the medicine is working?  Is it a false sense of security that we are feeling or are we right to believe in the economic upturn that is lurking round the corner for all of us in the world?

There may be a fair few people out there that are ready to poo-poo the idea that the economy is going to take another dive. But, there are signs that that is going to happen.

If the Eurozone is anything to go by, then we are ready for a rocky time ahead, still yet.

The Eurozone is down in the doldrums and it has been for the past 18 months. Economic output has fallen already this first quarter of 2013 by 0.2%. Now the largest economies in the EU are being hit as France declared that it had officially entered the recession. Unemployment is reaching unprecedented levels and the French are dealing with a 1% contraction in the economy.

Unemployment figures in the Eurozone increased from March’s 12.10% figure to 12.20% in April 2013. Between 1995 and 2013, unemployment averaged out at 9.32%, but April’s figure was the highest ever for the Euro area. When will they be returning to a reasonable figure of their all-time low of 7.2% in 2008. There are 19.4 million people currently unemployed in the Eurozone, which is a hike of more than 95, 000 people signing on in just one month. The figure for the EU27 is not much better with 26.588 million unemployed people for April 2013, which was an increase of 104, 000. The Eurozone is suffering more, but the EU27 is still on a downer.

The future still looks pretty somber. That’s because Germany and France, which make up half of the Eurozone’s output are suffering severe setbacks in their economies. Germany’s economic growth stands at just 0.1% and that was well behind experts’ hopes. France has been told that their forecast of 0.1% is too optimistic, but the official line of the government and in particular Finance Minister, Pierre Moscovici, is that they are on the right track. That was all despite a 0.2% fall in GDP in May.

Hope beyond hope for the Eurozone is not going to bring them out of that recession. But, it looks like President of France, François, Hollande is doing little (or at least, what is being done is having little effect) to rectify the situation. There is a crisis on and it looks like the French people want and need action. Hollande is not an ‘action man’. He is quietly waiting according to most. The opinion polls have never been lower for a French President (since World War II) and he has the backing of just 25% of French people. Hollande has told them that in 4 months things will start to get better. We’re waiting too.

So, seeing what’s taking place in the EU and the Eurozone in particular, should the US be feeling elated signs of an economic boom that is approaching? Th EU crisis taking place right now is hitting the biggest and the best. It will undoubtedly show signs on the US economy pretty soon.

But, what is an upper in the market if it is nothing more than viral contagious belief that we are going to get things right in the near future? Maybe we are. Who can tell?

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tothetick

Professional team of writers/analysts analyzing the financial markets.

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