Economic data released in the U.S. and China show that financial stress is declining. The euro area also shows signs of decline.
As for home sales, the number should start decreasing in 2020. For the time being, however, these sales are still strong. There are some steps you can take to help yourself cope.
Economic data in the U.S. and China
Although financial stress is still high for many people, the data for August suggests that financial stress is declining.
Real consumer spending declined from a year ago, but that was partially offset by an increase in services spending. In other words, consumers are returning to pre-recession spending patterns.
Despite the slowing growth in US job growth, it remains relatively strong. This is good news for consumers, as the strong job growth and large pool of savings accumulated during the flu pandemic have lifted consumer spending.
Business investment is also growing, but has slowed slightly due to higher borrowing costs.
The current-account deficits in the U.S. and China have been improving. In the second quarter of 2022, the U.S. narrowed its deficit by $11.5 billion, or 1.1 percent.
This figure is lower than the revised first-quarter deficit of $282.5 billion. Meanwhile, foreign direct investment in U.S. businesses increased by $333.6 billion.
In the United States, the government released two reports on the job market. In the US, job vacancies decreased by almost 1 million, indicating that the labour market is growing slowly, though the pace is slowing.
Meanwhile, in China, the real estate crisis is deepening, limiting growth to 3.3 percent this year.
In the eurozone, growth is revised down to 2.6 percent this year and 1.2 percent in 2023 due to spillovers from Ukraine.
The US and China economic relationship has a much bigger benefit than is commonly understood. US exports to China help support 1.8 million Chinese jobs.
The two countries share a huge amount of debt and equity securities. While trade with China has resulted in job loss in some sectors, the net benefit to the United States exceeds the cost of production and imports.
However, the administration’s focus on US-China trade deficits is a flawed measure of the relationship between the two nations.
In the US, housing sales jumped in August, but were flat year-over-year. This followed a period of weak housing sales caused by tight monetary policy. However, one month does not make a trend.
While this data does not confirm the fact that housing is a major contributor to the economy, it contradicts the notion that housing will lead to a recession.
Declining financial stress in the euro area
Declining financial stress in the euro area has a variety of implications. For one, the spread of financial stress across countries is worrying.
Small and medium-sized banks in countries with high unemployment have been particularly stressed.
While large banks can compensate for these issues, the slow resolution of these problems in the smaller sector could prolong the recovery.
A further concern is the impact of excessive national debt. When a country’s debt is high compared to its GDP, its lenders are likely to demand higher interest rates to cover their debts.
This is why four out of eighteen eurozone governments had trouble financing new budget deficits or repaying their existing government debt.
This made refinancing debt a difficult proposition, especially when a high percentage of it was held by foreign creditors.
The European Commission has launched a plan to bolster capital markets, but the plan has stalled. Most indicators of capital market size and integration have moved sideways since 2015.
The main problem is that national politicians have not committed fully to harmonising rules across countries. This is a problem for the eurozone and for the wider economy.
There have also been problems in the non-performing assets sector. In December 2013, Euro-area banks had EUR 879 billion in non-performing exposures.
The average bank in the euro area had provisions covering only 42% of these NPEs. The problems were largely contained by large banks, which are generally the most stable institutions.
However, some smaller and medium banks are falling below the 3% equity/assets threshold. They have high NPEs and low provisions, which could be insufficient in case of a shock.
Despite the rising levels of financial stress in the eurozone, the Euro STOXX 50 Volatility Index has retreated significantly in recent weeks.
The index is still elevated, but it is far below the 2022 peak. However, this index is still below the level of the global pandemic and the European sovereign debt crisis.
Meanwhile, Greece and Italy are still in financial crisis. Greece’s economy is only at half of its level of 1986 and the country’s consumption has fallen to 1950 levels.
The ECB’s additional OMT packages have helped the situation calm down. The ECB has also announced that it will extend the OMT program for the eurozone countries as long as they require assistance.
However, the countries must meet certain conditions set in the MoU agreement.
Getting control over your money
Financial stress can be caused by a variety of reasons. There are several steps you can take to minimise it and get your finances back on track.
These solutions can range from tightening your budget to lowering your interest rate on credit card debt. Getting a new job or a second source of income can also help you overcome financial stress.
The first step in reducing financial stress is to set realistic financial goals. It is essential to create a budget so you can see where your money is going.
This will help you control your spending and avoid becoming in debt. Another solution is to establish a financial plan to help you pay off your debt.
Financial decisions can add up over time, even if they are small and inconsequential. These decisions can impact every aspect of your life, including your ability to sleep.
Some people even develop insomnia due to financial stress. This condition isn’t fun, and if you want to feel more in control of your finances, you must take action.
Financial stress is a serious issue for many Americans. According to a survey of financial institutions, financial problems are the number one cause of chronic stress.
More than two-thirds of respondents indicated that they feel stressed about their finances once a month. Unfortunately, many of these people are not taking any steps to secure their financial future.
Financial stress is not only detrimental to your mental and physical health, but it can also have long-term physical consequences.
Chronic stress triggers the release of a series of hormones that increase heart rate, muscle tension, and breathing, among other things.
These hormones also increase blood pressure, which is bad news for anyone.
Reaching out to friends and family
Many people experience financial stress at some point in their lives. This stress is often short-term, such as when we lose our job or face unexpected expenses.
Reaching out to friends and family for support can help us process our emotions and put things into perspective.
These people may also offer valuable advice on money management and other financial strategies that can help us structure a less stressful life.
Financial stress can be caused by a variety of money issues, such as a lack of income and high interest rates on credit card debt.
There are a number of different ways to reduce this stress, such as creating a budget and sticking to it. It is also possible to talk to a financial advisor and get free financial advice.
They can help you set up a budget and provide tools to help you stick to it.
Financial stress can negatively affect your mental and physical health. It can impair your energy levels and make you feel angry or socially withdraw.
Also It can lead to gastrointestinal problems, high blood pressure, heart disease, and other physical problems. It can even lead to depression or suicidal thoughts.
While talking to friends and family about financial worries is often uncomfortable, it can provide emotional support and a sense of connection. Talking about these problems with others can help you see your problems from a new perspective.
Keeping money worries to yourself only magnifies the stress and can make it seem more daunting. Your friend or family member does not have to offer financial help, but they should be able to listen without judging and understand your emotions.
Financial stress can lead to unhealthy coping mechanisms such as overeating, overspending, and substance abuse. It can affect every aspect of our lives, making it more difficult to focus on important activities.
Moreover, financial problems can make us less productive and cause us to lose sleep.
