For the global economy, it’s the end of cheap money, soaring energy prices & crippling inflation



Housing markets around the world are slowing down drastically, underscoring a sector that’s highly sensitive to interest-rate increases.
Pending and new home sales both fell in the US in July to multi-year lows, while the slump in Australia is raising the risk of a recession. Home values in London are flat or falling in almost half of the city’s boroughs, and the property downturn in China is testing whether the central bank can stick to its stimulus-lite strategy.
Elsewhere, key measures of US growth diverged in the first half of the year and inflation-adjusted spending rose at a sluggish pace last month. In the UK, officials are thinking outside of the box to solve the nation’s energy crisis.

Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:
US
BloombergUS consumer spending rose at a sluggish pace in July, even while Americans got some relief on prices, indicating the economy is feeling the pinch from the highest inflation in a generation. Even though the Fed’s headline inflation figure eased, wages and salaries rose a robust 0.8% in July, which may spur further concerns about inflation becoming entrenched in the economy.

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

BloombergUS pending home sales fell in July for the sixth time this year to the lowest level since the start of the pandemic, extending the housing market’s sharp downturn as high borrowing costs sideline prospective buyers. Separate data showed sales of new homes fell in July for the sixth time this year to the slowest pace since early 2016.
Europe
BloombergIdeas that were once unthinkable are starting to gain traction among experts looking at how to solve the UK’s energy crisis. Suggestions from politicians, former ministers, energy analysts and economists echoing the solutions of the 1970s include nationalizing industry, fixing prices, rigging wholesale energy markets and even telling industry to shut down.

BloombergThe end of cheap money. Soaring energy prices and crippling inflation. A recession on the horizon. For the UK housing market, that toxic mix is fueling concern that a sharp correction is on its way.
Asia
BloombergTaiwan’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% decline in orders from China and Hong Kong — which, combined, are the second-largest source of demand after the US — was the main driver of the surprise fall, ministry data show.

BloombergChina’s property market crisis is testing whether central bank Governor Yi Gang can stick to his stimulus-lite strategy. Yi has recently promised monetary policy will remain “accommodative” to support the economy, but there’s an implied limit to how far the PBOC will go.

BloombergAustralia’s rapid-fire interest-rate increases are sending tremors through the nation’s heavily indebted households and threatening a property downturn on a scale unseen since the eve of the 1991 recession.
Emerging Markets
BloombergBrazil posted its biggest mid-month decline in consumer prices on record in a drop that was smaller than analysts expected, as President Jair Bolsonaro’s anti-inflation measures provide some relief ahead of elections.

BloombergCentral banks across sub-Saharan Africa will likely have to remain focused on reining in price growth in the coming months, with economists raising their inflation forecasts in many of the region’s key economies. Countries including Ghana, Nigeria, South Africa and Kenya will see higher inflation than previously forecast this year, according to a Bloomberg News survey.
World
BloombergIsrael’s central bank surprised most economists by delivering its biggest increase to interest rates in two decades. Iceland also hiked rates by 75 basis points, while Botswana opted for 50. Officials in Paraguay, Indonesia and Korea went for a 25-basis-point increase.

BloombergAbout 2,000 dockers at the Port of Felixstowe began an eight-day walkout on Sunday, halting the flow of goods through the UK’s largest gateway for containerized imports and exports. Shipping lines plan to reroute cargo around the picket line, adding time and cost.

BloombergEconomic activity weakened from the US to Europe and Asia, reinforcing concerns that soaring prices and the war in Ukraine will tip the world into a recession.