The three things I picked out for commentary from this week’s 85 data releases were:
Stasis in the US - both capital goods spending, and household financial stress measures both keep just tracking sideways, as they have for months now. It suggests there’s surprisingly little cyclical pressures actually being felt - despite the cacophony of economic and financial commentary.
Germany’s 1Q GDP announced the country had entered recession, but when I did the numbers, it turns out Germany’s Kalecki profits are in sharp recovery. So Germany joins the US and UK in enjoying a profits recovery even as its economy struggles. In none of these countries does that look like an obvious backdrop for sustained recession. And in these countries the profits recovery share two factors - government deficits are rising once again, and the terms of trade knock felt last year is wearing off.
In the UK, April’s 8.7% yoy headline CPI read came from a 1.2% mom rise which was 2.4SDs above historic seasonal trends. Horrible, and bond markets reacted accordingly. But I have two observations. First, April’s CPI is yet another testament to the UK government’s crazy and damaging energy policies, which charge at the highest - not the lowest - marginal cost discovered by producers. Turning basic economics on its head is not usually a smart strategy. But second, the sustained rise in CPI means distributors (shops etc) have just about made up the margins they lost last year. So perhaps we’re nearer the end of this inflation cycle than the beginning.
