For the past few months, there has been a constant wave of questions: Will there be another crisis? Will the Eurozone collapse? What are the objective criteria for identifying an economic downturn in a country? Let’s compare the criteria used to determine when a crisis begins with fundamental facts and social trends (based on news from the media).
Other articles in the “Market Discussions” section
- Forex forecasts: Market bulls vs. bears
- Forex: Human vs. Robot
- Eurozone debt vs. U.S. government debt
Crisis? It Depends on Perspective!
Today, awareness of global economic crises is taking a backseat to political events, such as issues in the Middle East, riots in Egypt, the Snowden scandal, and others. Meanwhile, the global economy is experiencing many exciting developments.
Let’s examine and verify some hypotheses:
- The global economy is in a crisis;
- The European economy is also in recession, which was officially announced;
- The American economy is also in a crisis, but due to fabricated reporting and its leading position in rating agencies, it tells us the opposite.
If we look at the real indicators, consider GDP, inflation, unemployment, interest rates, and government debt levels.
We remind you that the U.S. is recalculating GDP using a new methodology! According to these data, the country’s GDP has significantly increased, and the large government debt has decreased considerably.
Lies, Plain Lies, and Statistics
Why is this done? Who benefits? Remember the words of Benjamin Disraeli: ‘There are three kinds of lies: lies, damned lies, and statistics‘. It is on this statistics that public opinion is built, which directly and indirectly affects stock markets, where we see a bubble in the form of rising index values. The following chart shows GDP by country, with color indicating the status of interest rates.
Now let’s look at the employment level worldwide and specifically in the United States.
Unemployment globally is high. This can even be judged by the creation of new non-governmental organizations focused on drawing attention to employment issues.
Among developed countries, Spain and Greece stand out, with unemployment rates of 26% and 27%, respectively. To some extent, France and Italy also show unfavorable growth in unemployment rates.
In the U.S., there is positive development, again according to official statistics. However, unofficial numbers are two to three times higher. This is explained by various factors: the government hides real numbers, fewer people apply for benefits, and so on.
Let’s look at inflation rates (see Fig. 6). The map is simple – the darker the color, the higher the inflation level. Russia stands out as a problematic area with an official inflation rate of 6.5%. However, people living in Russia know the true inflation, especially in energy resources, food products, and so on. In addition, since the start of this year, both Europe and the U.S. have seen inflation grow faster than GDP growth.
The Great Depression – Reload
Many economists consider critical levels of the Dow Jones index at 16,500-17,000 points, and S&P 500 at 180 points. Only after reaching these levels will decline begin, and it will not be gradual, but like in
FAQ
What are the criteria for identifying an economic crisis?
Economic crises are typically identified using indicators such as GDP, inflation, unemployment, interest rates, and government debt levels.
Why is there a discrepancy in U.S. unemployment statistics?
Official U.S. unemployment numbers may not reflect the true situation due to factors like hidden data, fewer people applying for benefits, and potential underreporting.
How do global inflation rates compare to GDP growth?
Inflation has been rising faster than GDP growth in both Europe and the U.S., indicating potential economic challenges.
