Charting the Global Economy: US Jobs Signal Another Big Fed Hike


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Sustained US job growth and an unemployment rate near a 50-year low bolstered bets that the Federal Reserve will proceed with another big interest-rate hike this month to rein in demand and tamp down inflation.

Jumbo hikes were the theme of the week in other countries as well, like Hungary and Pakistan, as policy makers work to extinguish price pressures.

Meantime, Germany is considering setting aside strict borrowing limits next year if Russia halts natural gas deliveries for an extended time. In Japan, household spending weakened, calling into question the strength of the recovery.

Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:

A very busy week for central banks saw more than a dozen across the world hiking rates. Jumbo increases were in the majority, with Hungary going for 200 basis points, Pakistan for 125 basis points and another eight for 50 or 100.

The recession calls are getting louder on Wall Street, but for many of the households and businesses who make up the world economy the downturn is already here. The worries among small business owners, consumers and others are illustrated by so-called Misery Indexes, which blend unemployment and inflation rates.

Each wave of supply shock to hit the global economy during the pandemic seems to produce a different scapegoat. With the second half of 2022 just underway, there may yet be another culprit for supply stress — labor unrest.

Nearly 400,000 jobs added in a month and an unemployment rate near a 50-year low is probably enough evidence of the extreme tightness in the US labor market. But a look beneath the surface of the June employment report, and other recent data, shows just how hot it really is.

Germany is set to ditch its plan to return to strict borrowing limits next year if Russia stops natural gas deliveries to Europe’s largest economy for good, according to people familiar with the matter. There’s a silent agreement among cabinet members of Chancellor Olaf Scholz’s coalition that Berlin can’t stick to its fiscal plans in an emergency where Russian President Vladimir Putin uses scheduled maintenance on the Nord Stream pipeline as an excuse to end gas flows for a longer period, said the people.

Expectations for inflation, output prices and wage increases among UK businesses are all building, according to a Bank of England survey that may convince policy makers to push for bigger interest-rate hikes in the coming months.

French President Emmanuel Macron’s standout success in using public spending to tame rampant inflation is reaching its limits as a swelling debt burden and the loss of a governing majority curtails his ability to act. An intensifying cost-of-living squeeze would also further cloud France’s economic outlook, and threaten to revive grievances that sparked unrest during Macron’s first term with the so-called yellow-vest protests. 

Japan’s households cut spending in May for the first time in three months in a sign that the economic recovery is proving weaker than previously thought.

Signs are mounting that China’s economy shrank in the second quarter for the first time since 2020, placing the nation’s official statistics under fresh scrutiny as analysts bet the government will avoid acknowledging that slump.

China’s Ministry of Finance is considering allowing local governments to sell 1.5 trillion yuan ($220 billion) of special bonds in the second half of this year, an unprecedented acceleration of infrastructure funding aimed at shoring up the country’s beleaguered economy.

Thailand’s retail inflation accelerated in June to a new 14-year high, boosting the case for central bank to raise borrowing costs sooner than later. Faster inflation adds to the case for Southeast Asia’s second-largest economy to join central banks the world over in tightening policy settings to rein in price gains.

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