If there’s ever a time when macroeconomic statistics are confusing and confusing, it’s right now. Among the goals of the European economy, these are the first ones that are quite difficult to decipher.
When we start from the hard data, we can say this: In practically all countries where economic activity was good in Norway, it happened that the so-called PMI activity index fell, and more than expected. But on the contrary, the same PMI activity index in services rose, and more than expected. Or in other words: The industry cannot and will not be able to meet the expectations. And about the vows, the reverse is true: I vow to give myself up slowly, and let them go better, not expected.
Just what does that mean?
Let’s realize one thing: They are companies that, in principle, always have information that really keeps their finger on the pulse of the economy. On the contrary, it is households that take much longer to get their bearings in the situation. Homes on land therefore have fixed mortgages. Over the years, rates have often been just above zero, although the latest inflation rate, for example, was 17.5 percent in the Czech Republic. In the same way, households pay a little more for energy, but a large number of them have to have their energy fixed, and the governments have come up with conservation programs.
It is true that there are people who perceive inflation as a lot you, not as the official one: For example, pensioners whose salary is only for food, energy and medicine shortages can subjectively perceive inflation between 30 and 50 percent in individual cases. But first we said: these pensioners pay only for food, energy and medicine. Not for the servants who are now so impressively warmed up. In contrast, we have a middle-aged group of active, working people who buy vacations, cars, have fixed mortgages and fixed energy bills. And you, on the other hand, perceive inflation subjectively as in, not as it is official. And they probably wanted to loosen up a bit and pay for more services.
And the millionth question is: which of them is better at monitoring the actual state of the economy, and which of them is predicting future development? Retirees or active people? And my answer is: None of them, the industrialists at this moment best respect reality. What will it be worth spending more money on tracks, when tangible goods will be produced for me? This is exactly what led during the pandemic years to free standing inflation.
So we will be glad that the households are optimistic, let’s give them credit for that, but bread will be broken, and only in a few months will the households find out how they are doing after all their fixations have been washed away. And go one vc. Inflation can only be tamed under the assumption that costs in the economy will decrease and the demand for goods and services will decrease. In other words, inflation decreases if the decrease divides between high demand and low supply. This is another reason for central banks to raise rates for years to cool demand. Only the demand for services is currently growing, while the supply of goods is constantly changing. This is the real message of those confused messengers. I’m sure we can deduce what this means for inflation.
