Archive

May 01, 2025
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UK: Tax Hikes Disrupt Housing Market

  • Domestic tax hikes are more substantial than US tariffs in April, so the impact should not be forgotten, even if the UK government wants to blame any damage on Trump.
  • Frontrunning April’s stamp duty increases stoked transactions and lending, and may take at least a few months to recover afterwards. Resilient approvals are reassuring.
  • Higher transaction costs probably won’t break expectations into a downwards spiral, but are now widely cited as a major hurdle, contributing to slower UK activity growth.

By Philip Rush

April 30, 2025
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EA: GDP Stimulated Faster Than Supply

  • Activity growth in Q1 shouldn’t be dismissed as it helps signal the economy’s momentum and effective monetary conditions that trade shocks will fall on top of in the euro area.
  • GDP growth exceeded expectations again by increasing to 0.35% q-o-q. Productivity’s poor post-pandemic performance helps GDP drive the ongoing fall in unemployment.
  • Supply’s trend seems to have softened despite demand’s improving, raising excesses and the risk that ECB monetary policy was already stimulative before the trade shock.

By Philip Rush

April 29, 2025
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EA: Easing Stagflationary Noise

  • Hard economic data must match gloomy sentiment to justify ECB rate cuts reaching a stimulative setting. The little evidence available so far doesn’t show much of a shock.
  • Bank lending growth kept rising for companies and households in March as monetary conditions appear to be loosening, not tightening, due to the initial tariff shock.
  • Activity surveys only softened slightly in services, while inflation expectations are broadly high. Failure to see much more stagflation eases the likelihood that it occurs.

By Philip Rush

April 24, 2025
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DOGE Didn’t Dent Resilience

  • President Trump is restructuring the US state through tariff funding and efficiency savings. The former dominates focus, but we also see no evidence of problematic cuts.
  • Jobless claims are low and stable, including among federal workers and in states with the highest federal workforce shares. Government job openings haven’t even fallen.
  • DOGE cuts are often multi-year and in grants to others. It may have helped the deficit, and the efficiency is fundamentally desirable. Concerns about it still seem overblown.

By Philip Rush

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