The article that I read this week discussed the ongoing economic
struggles within the Euro zone. The Euro
zone consists of the 17 countries that all share the Euro as their form of
currency. GDP in this area has recently
shrunk by .6%. This number has come from
a decline in both household spending and investing. Unemployment in these areas has risen to a
record high 11.9%, while the US is at a recent low of only 7.7%. The economies within this Euro zone are
currently viewed as the softs spot in the global economy, but it does not
appear as though their struggles will drastically affect other large
economies. Both Japan and the US are
expected to experience continued growth.
The Sovereign Debt crisis has caused Greece, Ireland, and Portugal to
seek government bailouts which has raised the borrowing costs to staggering
levels in both Spain and Italy. The cure
for this problem has been increased interest rates accompanied by increased
government spending. With all of these
problems in the European economy the stock market has remained surprisingly
strong. The Central Bank has been
pumping out monetary stimulus. These
gains are expected to decline as the economy begins to recover. When the economy improves the amount of
monetary stimulus will decrease and may possibly slow the market.
http://www.nytimes.com/2013/03/07/business/global/daily-euro-zone-watch.html
