Post-pandemic, the Euro space grows lower than the USA: consumption, stimuli and work weigh on it | EUROtoday

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Private funding was stronger within the United States than within the euro space, whereas public consumption contributed extra to GDP development within the euro space than within the USA.


Unlike US customers, euro space households have gathered a comparatively small quantity of liquid belongings, the bulletin stated. « If these households had diminished their financial savings price by the identical quantity as their US counterparts within the post-pandemic interval, all different issues being equal, the cumulative consumption development differential would have been about 3 share factors as an alternative of the ten share factors really recorded because the fourth quarter of 2019″.

The war in Ukraine

The economic impact of Russia's invasion of Ukraine in early 2022, as well as the resulting energy crisis and spikes in food inflation “have had a very extreme influence on the euro space economic system.” This is attributed, in the Bulletin, to the geographical proximity, the level of dependence on energy and food imports from this region and the negative impact on euro area consumer confidence.

In the euro area, the strong shock to trade has translated into a reduction in real incomes and a weakening of competitiveness, in a context of declining confidence and increasing uncertainty. “This has contributed to slowing down private consumption, particularly that of goods.” Services activity was boosted by reopening effects in both regions, but services product growth was stronger in the United States. Furthermore, the euro area's greater trade openness has meant that its manufacturing sector has been particularly exposed to supply bottlenecks and the global slowdown.

Productivity and the labor market

Since the pandemic, the United States has seen considerably greater labor productiveness development than the euro space. In the post-pandemic interval, labor productiveness per hour labored elevated by solely 0.6% within the euro space, in comparison with 6.0% within the United States. The implementation of job retention packages within the euro space weighed towards the rise in unemployment within the United States.