In the US, consumer confidence unexpectedly improved in May. Sales of new homes and house prices both showed slightly more positive moves too. These may be tentative signs for optimism in the trajectory of a US recovery, let’s wait and see, but at least there may be light at the end of the tunnel.
In Europe, arguments about financial support have finally been settled: EU member states will be able to apply for loans (under very favourable conditions) from a €500 billion recovery fund. Meanwhile, the ECB predicts a contraction of between 5% and 12% for the eurozone economy this year – a clear indication of the uncertainty and negativity of ECB forecasters, and an explanation for the size of the generous new support measures being announced. In the meantime, data coming out of the bloc remains mixed: German GDP contracted 2.3% in Q1 2020, but the IFO Business Climate Indicator for Germany rose in May from an all-time low. Again, possible early signs of economic recovery, but we’ll have to wait for more data releases in the coming weeks.
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