In the United States, the Federal Reserve (Fed) remains cautious despite domestic demand which has grown at a sustained pace since 2023. “But what is driving growth is essentially public spending. The Inflation Reduction Act (IRA) was a temporary engine for the economy and encouraged investment in industry. We also see that research spending and development are very important in the United States, which is an indisputable support for growth”, recognizes this economist. Strong immigration has allowed the job market to grow while, at the same time, the unemployment rate has increased. There is no risk of recession in this country. “But this economy must slow down”, recommends Anton Brender. The unemployment rate remains low but we are not seeing any productivity gains. The Fed is therefore keeping its brakes tight and we can undoubtedly expect two interest rate cuts between now and the end of the year. Given the elections, we can expect high volatility on the markets across the Atlantic at the end of the year.
Donald Trump or Joe Biden? “For the markets, there is no good or bad candidate”
The case of Europe
And Europe in all this? “We are still in a lower situation than before the Covid crisis. It is especially the situation in Germany which has been abnormal. But the economy of this country recovered in the first quarter. Due to weak demand, companies invest less The engine of European growth will be the increase in consumption.says Florence Pisani, Global Head of Economic Research at Candriam. The situation is different compared to the United States. Europe pays more for its energy, it has less budgetary support and its labor market is tight. “Most of the growth gap between the United States and Europe lies in productivity gains which are too low in Europe. Furthermore, we are witnessing underinvestment in research and development in Europe”acknowledges Florence Pisani. However, a modest acceleration in activity seems to be underway. But the growth gap between the eurozone and the United States is likely to persist. Overall, the global economy is not doing so badly despite the various geopolitical tensions we are experiencing.
