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Europe Is Beating Inflation. Why Can’t America Declare Victory?
Inflation has decreased significantly from historically high levels in both the United States and Europe. However, the United States is seeing a delay in progress, as the Federal Reserve is currently anticipated to begin reducing interest rates after the European Central Bank.
In March, the annual US inflation rate, as assessed by the Personal Consumption Expenditures index, increased to 2.7% from 2.5% in February. The Federal Reserve’s objective is to maintain a long-term inflation rate of 2%.
The Consumer Price Index, another indicator of inflation in the United States, has also exhibited a similar increasing trajectory. The Consumer Price Index (CPI) increased by 3.5% in March, compared to the corresponding month in 2023. This is a rise from the 3.2% recorded in February.
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Europe Is Beating Inflation. Why Can’t America Declare Victory?
Meanwhile, inside the group of 20 countries that utilize the euro as their currency, the annual consumer price inflation rate has consistently decreased since the beginning of the year. The percentage was 2.4% in March.
Market predictions suggest that the European Central Bank (ECB) is likely to begin reducing interest rates in June, which is three months ahead of the forecasted rate decrease by the Federal Reserve (Fed).
There are even signs that the Federal Reserve may take action that, until recently, seems unimaginable – increase the interest rate for borrowing. In a recent statement, Fed Governor Michelle Bowman expressed her support for a potential increase in interest rates if there is a slowdown or reversal in inflation.
What is the reason the United States has a more significant inflation issue than Europe?
Several economists contend that the disparity in inflation rates between the United States and Europe is insignificant, attributing it to a peculiar aspect of the measurement methods used in the United States.
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Europe Is Beating Inflation. Why Can’t America Declare Victory?
In contrast to the European Central Bank’s preferred measure, both the Personal Consumption Expenditures (PCE) and the Consumer Price Index (CPI) take into account the expenditures associated with owning a home, which includes the potential rental income that could be earned if the property was rented out instead of being occupied by the owner.
The plan aims to monitor inflation in the real estate sector, considering the high rate of homeownership among Americans. According to Paul Donovan, the head economist at UBS Global Wealth Management, people actually need to experience these theoretical housing expenses.
The US Consumer Price Index (CPI) assigns a significantly higher weight to owner-occupiers’ housing expenses compared to the Personal Consumption Expenditures (PCE) index. Specifically, the CPI assigns a weight of 32% to these costs, while the PCE assigns a weight of 13%. In contrast, the eurozone’s primary measure of consumer prices does not assign any weight (0%) to owner-occupiers’ housing costs.
Simon MacAdam, deputy chief global economist at Capital Economics, argues that the recent discrepancies between US and eurozone inflation are magnified by this transatlantic discrepancy.
When employing an alternative metric that eliminates hypothetical housing expenses and incorporates additional modifications, MacAdam discovers that core inflation rates, excluding energy and food prices, have exhibited high similarity in the United States and Europe during the previous six months.
“Contrary to recent commentary, the United States does not have a fundamental issue of widespread and excessive price pressure,” he stated in a note last week.
Economies that are moving in different directions or diverging from one other.
If the levels of inflation are essentially comparable on both sides of the Atlantic, then why are their respective central banks planning to initiate interest rate reductions at separate moments?
In essence, as MacAdam succinctly stated, central banks would modify their monetary policies based on the specific measure of inflation they aim to control rather than relying on harmonized or adjusted measures.
However, the situation is more intricate than that. “The divergence between the two sides of the Atlantic, particularly in terms of economic growth, is significant,” stated Carsten Brzeski, the global head of macroeconomic research at ING, in an interview with CNN.
According to the International Monetary Fund, the US economy is projected to see a growth rate of 2.7% this year, while the eurozone is expected to expand by only 0.8%.
In March, US firms experienced a significant surge in hiring, with the addition of 303,000 jobs marking a historic milestone. The United States government has allocated significantly more funds than European governments in recent years to provide support for consumers and businesses throughout the pandemic, resulting in a sustained and strong level of consumer demand in the United States.
Although the initial figures on Thursday indicated a lower-than-anticipated growth rate for the US economy in the first quarter, Treasury Secretary Janet Yellen expressed to Reuters that the economy is still performing quite well.
Europe’s economy has been significantly weakened, partly due to the enduring effects of an oil crisis. Following Russia’s complete invasion of Ukraine in 2022, the prices of natural gas in Europe, which used to rely on Russia for almost 40% of its pipeline gas imports, skyrocketed to unprecedented levels.
Consequently, the eurozone experienced significantly greater annual inflation than the PCE. The two rates reached 10.6% and 7.1% in 2022, respectively.
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Europe Is Beating Inflation. Why Can’t America Declare Victory?
According to Brzeski, the robustness of the US economy increases the probability of a significant resurgence of high inflation. This is causing the Federal Reserve to be more cautious than the European Central Bank in initiating interest rate reductions during the summer.
Both the United States and the eurozone are currently dealing with labor shortages. This has led firms to increase pay to attract and retain workers, which in turn is contributing to inflation in the services sector. However, in a broader sense, the demand from US consumers seems to be stronger.
“The savings ratio of US households is decreasing, indicating that people in the US are willing to use their savings for spending,” he stated. “Typically, European households tend to be more prudent.”
Davide Oneglia, the director of European and global macroeconomics at research firm TS Lombard, has a comparable perspective. “The US consumer is exhibiting a greater inclination to engage in spending due to a potentially improved outlook for their own employment situation,” he stated in an interview with CNN.
SOURCE – (CNN)
Prime Minister Justin Trudeau has come under fire yet again after a video surfaced on X, showing him dancing at a Taylor Swift performance while anti-Nato protestors ransacked downtown Montreal.
Trudeau attended Taylor Swift’s concert in Toronto on Friday night. Before Taylor Swift approached the stage, X shared a viral video of him dancing and singing along to the song “You Don’t Own Me.”
The image of Trudeau dancing amid violent protests in Montreal generated widespread indignation online. Some social media users even compared Trudeau to the ancient Roman dictator Nero, known for “fiddling while Rome burned.”
Don Stewart, a Member of Parliament (MP) representing part of Toronto, called out the prime minister in a post on X.
Lawless protestors run roughshod over Montreal in violent protest.
The Prime Minister dances.
This is the Canada built by the Liberal government.
Bring back law and order, safe streets and communities in the Canada we once knew and loved. pic.twitter.com/PVJvR6gtmf
— Don Stewart (@donstewartmp) November 23, 2024
“Lawless protesters run roughshod over Montreal in violent protest. The Prime Minister dances,” Stewart wrote. “This is the Canada built by the Liberal government.”
“Bring back law and order, safe streets and communities in the Canada we once knew and loved,” the MP added.
On Saturday, the day after Taylor Swift’s concert, Trudeau condemned the anti-NATO protests, calling them “appalling.”
Anti-NATO activists set off smoke bombs and marched through Montreal’s streets waving Palestinian flags. According to the Montreal Gazette, rioters set fire to automobiles and battled with police.
Pro-Palestinian protests
Protesters also tossed tiny explosives and metal objects at officers. At one point, the mob torched an effigy of Israeli Prime Minister Benjamin Netanyahu. Police used tear gas and batons to disperse the gathering, and three persons were arrested for attacking officers and impeding police operations.
Masked protesters were seen burning flares and bashing storefront windows in videos and photographs shared on social media. Pro-Palestinian protests have been taking place across Canada since the Israel-Gaza conflict began late last year.
Critics have lambasted Trudeau for doing nothing to stop the violent pro-Palestinian marches, with some claiming he has fueled anti-Israel sentiment in Canada.
On Friday, Trudeau stated that Canada would respect the orders of the International Criminal Court (ICC), which issued an arrest warrant for Mr Netanyahu, even if it meant arresting the Israeli prime leader on Canadian soil.
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The Calgary Zoo has admitted in a public statement that a zookeeper’s negligence caused the death of a 2-year-old baby gorilla. Eyare, a newborn gorilla, died last week after being slammed in the head by a hydraulic door.
The accident occurred when a zoo worker attempted to separate Eyare from the rest of the gorilla tribe for a solitary training session.
The gorilla died from significant head injuries, according to the zoo’s statement.
“This tragedy has struck us all in the deepest way imaginable,” Colleen Baird, director of animal care at the Calgary Zoo, said during a news conference. “Eyare’s brief but meaningful existence gave so much joy to our community, and all will sorely miss her. We will do everything possible to prevent repeat accidents.”
According to Baird, the staff member involved was immediately removed from the workplace and will be reassigned to another area of the zoo. The Calgary Zoo stated that it would take preventive steps, such as specialist personnel training and animal behavioral training, to avoid a similar incident.
Calgary Zoo Questioned
It is not the first time an animal at the zoo has died from negligence at the Calgary Zoo. A capybara was accidentally crushed by a hydraulic door similar to the one that killed Eyare in 2019.
An otter died in 2016 after being entangled in an “unauthorized” pair of jeans that a zookeeper had dropped in its enclosure. In 2013, a penguin died in “a freak accident” after swallowing a stick.
Animal Justice, a Canadian group that promotes animal welfare, has called for an independent investigation of animal safety and oversight at the Alberta facility.
“The Calgary Zoo appears to have a higher rate of animal deaths compared to other zoos, and in light of Eyare’s death there should be a systematic review of the zoo’s operations and practices, conducted transparently by the government or another outside party,” according to Camille Labchuk, the executive director of Animal Justice.
The Calgary Zoo refuted that it has more animal deaths than other zoos, emphasizing that it adheres to operating requirements and has maintained accreditation by the Association of Zoos and Aquariums’ independent Accreditation Commission since 1978.
“We love and care for more than 4,000 animals representing over 100 species that call our zoo home,” stated a Calgary Zoo representative.
“Human error-related deaths in animals are quite infrequent. We have lost two animals in the last ten years: a North American river otter in 2016 and ‘Eyare’ this week.
While rare, even one human-caused death is too many. These unfortunate instances have served as vital learning experiences, prompting us to examine and tighten protocols to provide the greatest level of care.”
Baird said at the news conference that using hydraulic doors is “common practice with accredited zoos,” adding that the facility will consider switching to alternate doors to improve safety.
The Calgary Zoo, which established the Wilder Institute in 2021, caters to nearly 4,000 creatures, including six more western lowland gorillas.
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Lotto Max in Canada has reached $80 million for only the second time in Canadian lottery history. Friday’s draw sought a winner for a $75 million pool, but the top reward remained unclaimed as of Saturday, increasing the jackpot.
Only once did the jackpot reach $80 million in September, when it broke the previous record. Before that, the prize was $75 million, a record.
The Lotto Max prize maximum was boosted earlier this year, enabling for jackpots of more than $70 million. The cap is now at $80 million.
While a greater fee may encourage more people to play, the odds of winning the lottery remain extremely low.
According to the Ontario Lottery and Gaming Corporation, the odds for a $5 ticket are around one in 33,294,800.
While there was no jackpot winner in Friday’s draw, someone did match six of the seven winning numbers, plus a bonus, earning them a payout of more than $320,000.
Lotto Max History
Lotto Max is one of three national lottery games in Canada, overseen by the Interprovincial Lottery Corporation. The game was introduced on September 19, 2009, and its inaugural draw occurred on September 25, 2009. It replaced Lotto Super 7.
The odds of winning the Lotto Max are 1 in 33,294,800. This is correct to a point but misleading.
Let’s have a look at the rules:
- Players choose 7 numbers out of 50
- Numbers cannot be repeated
- Numbers are automatically sorted into ascending order
- Each play buys 3 lines
- Each play costs $5
Seeing that players choose 7 out of 50 non-repeating numbers, the equation for the total number of possible combinations (this is different from permutations where the order in which the numbers appear is significant) when playing the Lotto Max is 50! / (7! x 43!)
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