Bets are crossed on when it will be the next economic downturn. Incredible as it may seem, a medium as serious as the ‘Financial Times’ has conducted a survey of fifty economists on when they think the next recession will begin in the US. Y 70% of those surveyed agree that it will be in 2023although they disagree with respect to the specific quarter, with the majority pointing to the second quarter of 2023.
Let’s remember that a recession requires two consecutive quarters with negative GDP growth and that is supposed to happen as a result of the rapid and intense rise in interest rates carried out by the Federal Reserve before the rampant inflation that, let us remember, last month was 8.6% in the USbarely a tenth less than ours.
In Spain, to my knowledge, no similar survey has been carried out, which does not prevent the sort that, after the unstoppable ‘boom’ already announced for the summer, is circulating around there around the fall, the world will fall on our economy in the form of a serious recession. So, no more. And as usually happens in this type of hoaxes, one does not know what should worry you more: those capable of starting it, I suppose thinking of weakening the Government by blaming it, or those who are taking it seriously and who are quite a few, from what comes to me. At the moment, it seems that what we call “financial markets”, which manage fatally with zero or negative rates, transferring the American experience to Europe, anticipate strong increases by the ECB to place the official rate at 2% within a year.
The truth is that if something is characterizing this 21st century, it is that all swans seem to be black.. Therefore, I will not be the one to ensure, emphatically, that it will not happen (that is what the inventors of the hoax play with). But I do affirm that I cannot find any data that gives it the slightest credibility. We are where we were: with a growth forecast slightly above 4% (the eurozone will be at 2.6%) and a second quarter where inflation will begin to decrease gradually. The forecasts for 2023 stand at growth close to 3%, above the average of the three years prior to the pandemic when no one was talking about a recession.
Those who try to find rational arguments for a clear manipulation of the state of mind of citizens, could indicate two data. The first, the significant social gap that existed in Spain when 53% of residents say that they do not make ends meet or that they do so with difficulty. Along with this, let us remember that 35% cannot go on vacation for even one week a year or that there is a 26% at risk of social exclusion. Although none of this is new, unfortunately we have been dragging it along for years, in the face of high inflation like the one we have, this is the sector that is losing the most relative purchasing power since the weight in your shopping basket of energy and food, the two chapters that are increasing prices the most, is greater.
The second data is normalization of monetary policy practiced by the ECB which has already resulted in two measures: an acceleration in the withdrawal of net purchases of public debt and the announcement for July of the first rate hike (0.25%) in a decade. With two nuances: the ECB can maintain until the end of 2024 the purchase of new debt that serves to repay old debt (it will try to compensate for deviations in the risk premium) and interest rates have already risen (Euribor and ten-year debt ) even earlier and more than advertised with the official type. If, as everyone points out, the second part of the year sees falling inflation, a further tightening of monetary policy would not be expected.the European.
Cross your bets, if you have nothing better to do
Nor is there a new speculative bubble in housing. As a scalded cat, it has been enough that the prices of flats for sale are rising, so that there is no shortage of people who bring up the speculative bubble experienced since the end of the last century until the 2008 crisis punctured it in our face, causing pain in the We have not fully recovered yet.
Various statistics coincide in reflecting two realities: the sale of homes is recovering at a good pace in Spain and, along with this, we have spent five consecutive quarters with prices rising quite intensely and homogeneously throughout the different communities. According to the Price Index prepared by the INE, new housing would be at level 139 based on 100, which is the price in 2015still far from that 152 reached at the beginning of 2009, and the one used in 136, far from the peak of 169 in the middle of the bubble.
But beyond prices, there are two fundamental differences that strictly prevent linking what is happening today in the real estate sector with that speculative bubble at the beginning of the century: sales today focus on used housingbecause the construction of new housing hardly exceeds one hundred thousand a year, compared to the 600,000 new flats approved in 2008.
Namely, today little new construction is built, partly due to lack of land and, partly, due to the absence of a public policy designed to facilitate access to home ownership for those young people who, without family help, the high cost of entry (not covered by the mortgage) expels them from the purchase market, despite the low interest rates that we have Dyed. The result of these restrictions is that thousands of young people are being left behindwithout the main investment of their lives and, in parallel, we are witnessing a rise in prices for the purchase of used housing and, also, for rent, as these markets have to absorb the demand that, in another situation, would be inclined to acquire housing new.
bad business for everyone
Pessimism is definitely cool right now.Perhaps because too many people walk around looking in the rear view mirror and fearing the future. And the biggest risk is that the financial markets find it profitable to speculate against the debt of some countries, as they did against the euro in 2011/12 and, in the early 1990s, against the European Monetary System. Pure harmful speculation.