Bets are placed on when the next economic recession will be. Incredible as it may seem, a medium as serious as the ‘Financial Times’ has conducted a survey of fifty economists on when they think the next recession will begin in the US. And 70% of those surveyed agree that it will be in 2023, although they disagree with the specific quarter, with the majority pointing to the second quarter of 2023.
Let us remember that a recession requires two consecutive quarters with negative GDP growth and this is supposed to happen as a result of the rapid and intense rise in interest rates carried out by the Federal Reserve in the face of rampant inflation which, let us remember, last month was in the US of 8.6%, barely one tenth less than ours.
In Spain, as far as I know, no similar survey has been carried out, which does not prevent the sort that, after the unstoppable ‘boom’ already announced for the summer, around the fall, the world cup will fall on our economy in the form of a severe recession. So, no more. And as is often the case in this type of hoax, one does not know what should concern one more: whether those capable of starting it, I suppose thinking of weakening the Government by blaming it, or those who are taking it seriously and who are quite a few, so it comes to me. At the moment, it seems that what we call “financial markets”, which are handled fatally with zero or negative rates, transferring the American experience to Europe, anticipate strong increases by the ECB to place the official rate at 2% within a year .
The truth is that if something is characterizing this 21st century, it is that all the swans seem to be black. Therefore, I will not be the one to ensure, emphatically, that it will not happen (that is what the inventors of the hoax play with). But I do affirm that I cannot find any data that gives it the slightest credibility. We are where we were: with a growth forecast slightly above 4% (the eurozone will be at 2.6%) and a second quarter where inflation will begin to gradually decrease. The forecasts for 2023 stand at growth close to 3%, above the average of the three years prior to the pandemic when no one was talking about a recession.
Those who try to find rational arguments for a clear maneuver to manipulate the state of mind of citizens, could point to two facts. The first is the significant social gap that exists in Spain when 53% of residents say that they do not make ends meet or that they do so with difficulty. Along with this, let us remember that 35% cannot go on vacation for even one week a year or that there is a 26% at risk of social exclusion. Although none of this is new, unfortunately we have been dragging it along for years, in the face of high inflation like the one we have, this is the sector that is losing the most relative purchasing power since the weight in its purchase basket of energy and food, two chapters that are raising prices the most, is higher.
The second figure is the normalization of the monetary policy practiced by the ECB, which has already resulted in two measures: an acceleration of the withdrawal of net purchases of public debt and the announcement for July of a first rate hike (0.25 %) in a decade. With two nuances: the ECB can maintain until the end of 2024 the purchase of new debt that serves to repay old debt (it will try to compensate for deviations in the risk premium) and interest rates have already risen (Euribor and ten-year debt ) even earlier and more than advertised with the official type. If, as everyone points out, the second part of the year sees falling inflation, a greater tightening of European monetary policy would not be expected.
Cross your bets, if you have nothing better to do
Nor is there a new speculative bubble in housing. As a scalded cat, it has been enough that the prices of flats for sale are rising, so that there is no shortage of people who bring up the speculative bubble experienced since the end of the last century until the 2008 crisis punctured it in our face, causing pain in the We have not fully recovered yet.
Various statistics coincide in reflecting two realities: the sale of homes is recovering at a good pace in Spain and, together with this, we have had five consecutive quarters with prices rising quite intensely and homogeneously throughout the different communities. According to the Price Index prepared by the INE, new housing would be at level 139 on base 100, which is the price in 2015, still far from the 152 reached at the beginning of 2009, and used housing at 136, a distance from the peak of 169 in full bubble.
But beyond prices, there are two fundamental differences that strictly prevent linking what is happening today in the real estate sector with that speculative bubble at the beginning of the century: sales today focus on used housing, because the construction of new housing barely exceeds one hundred thousand a year, compared to the 600,000 new flats approved in 2008.
Related news
That is to say, today little new construction is being built, partly due to lack of land and, partly, due to the absence of a public policy aimed at facilitating access to home ownership for those young people who, without family help, the high cost of the entry (not covered by the mortgage) expels them from the purchase market, despite the low interest rates we have had. The result of these restrictions is that thousands of young people are being left behind, without the main investment of their lives and, in parallel, we are witnessing a rise in prices for the purchase of used housing and, also, for rent, by having to absorb these markets that demand that, in another situation, would be inclined to acquire new housing.
bad business for everyone
Pessimism is definitely cool right now, perhaps because too many people walk around looking in the rearview mirror and fearing the future. And the biggest risk is that the financial markets find it profitable to speculate against the debt of some countries, as they did against the euro in 2011/12 and, in the early 1990s, against the European Monetary System. Pure harmful speculation.