Mapping the global economy: the housing crisis from the United States to Asia

Content of the article

(Bloomberg) – Sign up for the New Economy Daily newsletter, follow us @economics and subscribe to our podcast.

Content of the article

Around the world, housing markets are slowing considerably, highlighting a sector that is very sensitive to interest rate increases.

Content of the article

Pending and new home sales both fell in the United States in July to multi-year lows, while the slump in Australia raises the risk of a recession. Home values ​​in London are flat or falling in nearly half of the city’s boroughs, and China’s property slowdown is testing whether the central bank can stick to its light stimulus strategy.

Elsewhere, major measures of US growth diverged in the first half of the year and inflation-adjusted spending rose at a slow pace last month. In the UK, officials are thinking outside the box to solve the country’s energy crisis.

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

Content of the article

WE

U.S. consumer spending grew at a slow pace in July, even as Americans got some relief on prices, indicating the economy is feeling the pinch of the highest inflation in a generation . Even though the Fed’s headline inflation figure fell, wages and salaries rose 0.8% in July, which could raise further concerns about the entrenchment of inflation in the economy.

Key government measures regarding US growth pointed in different directions in the first half of 2022, adding to the ongoing debate over the health of the economy. Inflation-adjusted GDP, or the total value of all goods and services produced in the economy, declined at an annualized rate of 0.6% during the April-June period. However, the other lesser-known official measure of economic growth – known as gross domestic income – simultaneously climbed at a rate of 1.4%.

Content of the article

Pending home sales in the United States fell in July for the sixth time this year to the lowest level since the start of the pandemic, extending the sharp decline in the housing market as high borrowing costs push aside the potential buyers. Separate data showed new home sales fell in July for the sixth time this year at the slowest pace since the start of 2016.

Europe

Ideas that were once unthinkable are starting to gain traction among experts seeking to solve the UK’s energy crisis. Suggestions from politicians, former ministers, energy analysts and economists echoing 1970s solutions include nationalization of industry, price fixing, manipulation of wholesale oil markets energy and even the closure of industry.

The end of cheap money. Soaring energy prices and crippling inflation. A recession on the horizon. For the UK property market, this toxic mix is ​​fueling fears that a sharp correction is on the way.

Content of the article

Asia

Taiwan’s export orders unexpectedly contracted in July as demand from Chinese customers plunged, and officials are now warning of further declines to come. A 22.6% drop in orders from China and Hong Kong — which combined are the second-largest source of demand after the United States — was the main driver of the surprise drop, according to ministry data.

The crisis in China’s property market is testing whether central bank governor Yi Gang can stick to his soft stimulus strategy. Yi recently promised that monetary policy would remain “accommodative” to support the economy, but there is an implicit limit to how far the PBOC will go.

Rapid interest rate increases in Australia are rattling the country’s heavily indebted households and threatening a real estate downturn on a scale not seen since the eve of the 1991 recession.

Content of the article

Emerging Markets

Brazil recorded its biggest drop in consumer prices mid-month, a smaller drop than analysts expected, as President Jair Bolsonaro’s anti-inflationary measures brought some relief ahead of the election.

Central banks in sub-Saharan Africa will likely need to remain focused on containing price growth in the coming months as economists raise their inflation forecasts in many key economies in the region. Countries like Ghana, Nigeria, South Africa and Kenya will see higher-than-expected inflation this year, according to a Bloomberg News survey.

World

Israel’s central bank surprised most economists with its biggest interest rate hike in two decades. Iceland also raised rates by 75 basis points, while Botswana opted for 50. Officials in Paraguay, Indonesia and Korea opted for a 25 basis point increase.

Around 2,000 dockworkers at the Port of Felixstowe went on an eight-day strike on Sunday, halting the flow of goods through the UK’s biggest gateway for containerized imports and exports. Shipping lines plan to reroute freight around the picket line, increasing time and cost.

Economic activity has weakened from the United States to Europe and Asia, heightening fears that soaring prices and the war in Ukraine could tip the world into a recession.