— Steve Picarillo
Steve Picarillo, President of Creative Advisory Group, Inc issued a report today warning that an economic recession may take hold across the globe. Link to the full report.
First, in Italy, the seasonally adjusted unemployment rate rose to 12.6 percent in July. Unemployment in Italy, which slipped into a triple-dip recession in Q2 has been growing steadily since 2011. Meanwhile, Brazil falls into recession as its economy contracted 0.6 percent in the second quarter. Adding to the concerns, inflation in the eurozone has fallen to 0.3 percent in August, near a five year low. "While deflation could be helpful in some situations," Steve Picarillo interjected. "In the eurozone's current situation very low inflation (not to mention deflation) is troublesome as households, companies and governments have less cash coming in to service its already high (fixed) level of debt. Moreover, it can also lead to lower wages and salaries. Inflation less than 1% indicates a "danger zone". Concurrently, the updated unemployment rate in the ‘eurozone 18’ remained near a record high at 11.5% in July.
"The recent economic data certainly adds pressure on the European Central Bank (ECB), which is meeting next Thursday, to take action to stimulate the economy," Mr. Picarillo added. "In my view, it is unlikely that the ECB will alter interest rates or take any significant monetary action at this time. But it is increasingly more likely that in the coming months the ECB may inject money into the system with the hopes of stimulating growth and pushing up prices to control deflation."
Country-by-country the foundation is being laid for a difficult economic spell. Adding the geopolitical concerns and the heightened concerns of terrorism, the results do not bode well for smooth sailing on the economic front. "While, of late, I lean towards being a "pessimistic academic economist" and I believe the US economy is extremely fragile and weak, despite some recent positive data points, I expect that additional negative economic news will outweigh positive news and governments will find themselves in the position to take action sooner than later." Picarillo concluded, "as I said many times before, some of us have read this book and know how the chapter ends."
About Author:
The opinions in this article are the views/opinions of the author and Creative Advisory Group, Inc. (CAG), based on public information and the author’s experience. This is not a recommendation to buy, sell or trade any security, debt or any other financial instrument. The author and CAG do not hold any interest in any of entities mentioned in this posting, and have no plans of entering into any financial trade in the same in the next 72 hours.
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