Introducing

Robert Brusca

Robert A. Brusca is Chief Economist of Fact and Opinion Economics, a consulting firm he founded in Manhattan. He has been an economist on Wall Street for over 25 years. He has visited central banking and large institutional clients in over 30 countries in his career as an economist. Mr. Brusca was a Divisional Research Chief at the Federal Reserve Bank of NY (Chief of the International Financial markets Division), a Fed Watcher at Irving Trust and Chief Economist at Nikko Securities International. He is widely quoted and appears in various media. Mr. Brusca holds an MA and Ph.D. in economics from Michigan State University and a BA in Economics from the University of Michigan. His research pursues his strong interests in non aligned policy economics as well as international economics. FAO Economics’ research targets investors to assist them in making better investment decisions in stocks, bonds and in a variety of international assets. The company does not manage money and has no conflicts in giving economic advice.

Publications by Robert Brusca

Europe| Sep 30 2026
Inflation Sallies Forth
Inflation has flared across the largest economies of the monetary union. The headline boost is clear. The core or ex-energy gains also are clear but are more moderate; more moderate but nonetheless excessive in September. Largely over the last three months, inflation has been percolating.

The chart shows a clear, abrupt acceleration of inflation in the three largest monetary union economies: Germany, France, and Italy. Twelve-month inflation rates for the top four economies range from 3.3% in Germany to 5.0% in Spain. Over six months, the range is 3.5% (Germany) to 6.2% (Spain). Over three months, the stakes rise sharply, with annualized inflation spurts at a high of 9.1% (Spain) vs. ‘only’ 5.5% (Italy).

Inflation accelerates from a year ago to 12 months, from 12 months to six months, and from six months to three months on all headline comparisons except for Italy from six months to three months. But even on that comparison, the downshift in the pace is minor, and three-month inflation in Italy is still stronger than 12-month inflation. The inflation pressure is rising even if the gains are not monotonic.

Core inflation is high and mostly rising as well. However, core inflation is less prone to have risen over 12 months compared to 12 months ago. On that basis, only Spain’s core inflation has risen. German ex-energy inflation steps down, and Italian core inflation drops off to a below-target 1.5% over 12 months. To restart these comparisons for the three-country inflation ranges on the core or ex-energy measures over one year, we see a range from 1.5% to 3.1%. Over six months, inflation accelerates for all three, but the low end sees Italian inflation only up to a 1.6% pace, whereas the high end at 3% is Spain. However, Spain’s strong gain marks a deceleration from its 12-month pace. Over three months, inflation kicks up its heels across the core and ex-energy measures, from a low of 2.4% in Italy to a high of 3.6% in Spain. And core inflation accelerates in all three countries over three months.

Core inflation has been slower to rise, but once it rises it tends to be more stubborn. The global push toward higher inflation is still in gear as oil prices are lingering high. Stock markets have been trying to weather the storm of high inflation and an uncertain future. All eyes are turning to the winter season even though it is only fall. Winter is cropping up to be a difficult one for Europe, with low energy stockpiles as the season approaches. There is a lot to worry about and very little we can be sure of. As aspects of the future draw nearer, we’re gaining focus on what matters, and what matters and what is under control are, increasingly, two different things.
by:Robert Brusca
|in:Economy in Brief
Europe| Sep 29 2026
EU Commission Indexes Weaken in September
The EU Commission indexes weakened in September, with the overall index falling to 97.9 from 98.4 in August; however, the month's level is still stronger than recent readings prior to August (the strongest since February, excluding August). The index ranks at its 31.9 percentile on data since 1985, marking the month as below its median by a good margin. The median observation on data presented as a percentile ranking occurs at a ranking of 50%.

Monthly sector readings and perspectives The industrial reading improved month-to-month to -4 in September from -5 in August. The rise on the month lifts it just above its historic mean, and above its historic median, with a 54th percentile ranking. Consumer confidence slipped on the month to -16.5 from -15.5 in August. The consumer reading is substantially below its historic mean, which occurs at a reading of -9. The ranking for consumer confidence on the month is in its 12.4 percentile, an extremely weak reading. It has been this way for consumer confidence for some time. Even in the United States, where the economy is doing much better, readings on various consumer surveys have been exceptionally weak. The retailing assessment was unchanged at -6 in September; a reading of -6 is above its historic mean, which occurs at a value of -8. The month’s level also leaves retailing above its historic median at a standing of 56.6%. Construction was also unchanged at -5 in September; construction has been steady at -5 for a number of months in a row. Its historic mean is -15, and the -5 reading this month leaves construction at a 68.6 percentile, a quite firm level despite the negative diffusion reading. Services were also unchanged in the month at +6. Services have gotten slightly stronger in recent months. The historic mean for services is +6, so the sector is at its mean, but it is below its median, with a 39.4 percentile ranking.

Most country readings show gains on the month The reading for the overall EMU level declined in September, falling by 0.5%. In addition, seven reporting countries issued negative readings in September. Two of those countries, France and Italy, are among the four largest monetary union economies. However, the other two large EMU economies, Germany and Spain, marked improvements, with Germany rising 0.6% month-to-month in September and Spain rising 3.3% after a 2.1% decline in August.

Rankings remain overwhelmingly weak Looking at the rankings by country, among the 18 reporting countries only seven have country-specific ratings above their historic medians. Among the four largest EMU economies, only Spain is above its historic median with a 68.2 percentile ranking. Germany has a 29.6 percentile ranking, France is in its 36.9 percentile, and Italy is in its 44.8 percentile. The strongest reporting countries are small countries, with Greece posting a 73rd percentile ranking and Lithuania a 71.7 percentile ranking, followed by Spain’s 68.2 percentile ranking as the next highest reading.

Industry is back...for now It's good to see the industrial sector back up at a reading above its historic median and to be joined by retailing and construction. Retailing is a particularly rewarding sector to see performing well because consumer confidence is performing so poorly, with a 12.4 percentile standing. However, the services sector continues to lag with a 39.4 percentile standing, and that could be a problem because that's the job-creating sector for most economic units, and it's certainly true of the monetary union.

The job front On the job front, industrial employment and construction employment sectors report above 50th percentile standings in their monthly responses. With the employment in construction at a 71st percentile reading and for industry at a 68th percentile reading, we have some good news. However, for services, the employment reading is only at the 37th percentile, and that is the sector most responsible for delivering employment opportunities. Under consumer confidence, unemployment expectations have a 64.6 percentile standing, nearly a top one-third reading on that gauge. The U.S. economy is doing much better than the European economy; yet, there too, consumer confidence readings are weak, very weak. But the U.S. economy is growing strongly, and Europe continues to grow as well; a lack of confidence so far has not been an impediment to growth. As we can see so far this month, the manufacturing sector, the industrial sector, seems to be doing relatively better; however, everything is at risk due to events in the Middle East. Conditions in the Strait of Hormuz and what happens to oil prices are critical to what happens next. In addition, there's a great deal of concern about Europe and its low stocks of heating oil as winter approaches. The monthly readings from the EU indexes showed a step back on the month, but that was after the sharp improvement a month ago. In general, the European economy is doing a little bit better, with sectors in an upswing more so than they had previously, but conditions remain substantially touch-and-go, dependent on unforeseeable events.
by:Robert Brusca
|in:Economy in Brief
Finland| Sep 28 2026
Finland’s Confidence Erodes Only Slightly
Confidence across business sectors and consumers stepped back slightly in September in Finland. However, the overwhelming trend result is that business sector confidence is on an upswing; consumer confidence has undergone some slight weakening to its trend recently, led by some deterioration in its macro-indicator.

The monthly setbacks in September were relatively small, while the changes in confidence show improvement in the averages over three months compared to six months for all the sectors except retailing where the step-back is a single point to an average of 20 over three months from an average of 21 over six months. However, the retail sector is an exception and also shows a substantial step-down in September compared to August to a level that is going to point to a further deterioration in the moving averages ahead. But that phenomenon seems to be limited to retailing.

Manufacturing confidence holds steady with low single-digit positive readings over three months, six months, and 12 months. The September level has a 75.1 percentile standing, which is quite solid. Sector readings generally display this same phenomenon; construction is an exception as its headline readings are negative; however, they're improving more substantially. The retailing readings have been improving from 12 months to three months, based on the averages, until the recent drop-off in September.

The consumer sector shows consistently mild negative readings, and they have decayed slightly. The consumer sector is the only one with a current queue standing that ranks data back to 2007 below its historic median, meaning below a ranking of 50%. The consumer sector ranking in September is at 48.1%, marginally below its median. The other sectors have rankings generally in their mid-70th percentile, with the exception being construction, which has a 69.3 percentile standing. All of those are quite solid.

Finland’s business sector and consumer rankings as well as their within-sector readings are, for the most part, firm. The line item for the order book level in construction has a below-median standing in September; however, that reading has been improving smartly from 12 months to six months to three months. Expected sales in services register a 49.2 percentile standing, below their median; that reading has been dead solid at 15 over 12 months, six months, and three months.

The consumer sector shows some of the weakest readings (not shown here). Some of that traces to expected high consumer price inflation that has an 81.9 percentile standing in the consumer survey. While the overall threat to unemployment in that survey is above median at a 56th percentile standing, that generic overall concern does not translate into individual concerns as a separate reading on the personal threat to unemployment is quite low at a 17th percentile standing.

On the whole, the business and consumer readings for Finland are good and for the most part quite solid, with the need to keep an eye on the responses in retailing and perhaps also in the consumer sector, largely because of what appears to be the impact of inflation on the consumer psyche.
by:Robert Brusca
|in:Economy in Brief
Global| Sep 25 2026
Money Supply Growth Slows Except in the U.S.
Globally, money growth is easing but the U.S. has become an exception to global trends.

In the EMU, money growth has been slowing within the last year as 12-month growth at 4.3% turns to 2.8% over six months and to 2.4% over three months. In addition, speaking more broadly, the three-month and six-month growth rates are slower than the cumulative pace over three years and two years.

The performance of credit growth in the EMU runs along very similar lines, with greater easing within the 12-month span and growth being broadly weaker over three months and six months than over the last two years and three years cumulatively.

EMU money growth in real terms—real money balances—show not just slower growth but contraction over both three months and six months. They show a broad slowing, with some irregularity compared to longer periods.

The U.K. is not a clear read on money trends, but its three-month nominal growth rate is weaker although there is a small pickup over 12 months and six months compared to previous periods. U.K. real money balances also show contraction over three months but have speeded up over six months and 12 months from very weak rates of growth in their performance in earlier periods.

Japan shows clear slowing in nominal growth from 12 months on. Its recent growth rates are slower than its already slow rates over two years and three years. Japan’s real balance growth also shows real balance contraction over three months and six months as well as more broadly.

The U.S. is an outlier, with slightly weaker three-month nominal growth but with accelerations over 12 months and six months, and with three-month growth that is stronger than over the longer horizons of two years and three years. Growth in real money balances in the U.S. has accelerated and is accelerating within the last year and over the longer horizon as well. U.S. real balance performance shows monetary stimulus running flat-out, marking the U.S. as a clear monetary outlier.

While tracking and relying on monetary signals has fallen “out of fashion,” a lot of that is because of monetary innovation. It is not clear that the finding that U.S. real balances are accelerating should be treated as a benign event. Money growth in the U.S. is strong in real and nominal terms.
by:Robert Brusca
|in:Economy in Brief
United Kingdom| Sep 24 2026
U.K. Retail Sales Come Up Lame in September
BOE Decision to Hold Rates in the Face of Inflation Seems Prescient While inflation continued to be a problem as the Bank of England had its last policy meeting, the BOE decided to hold the line on the policy rate despite a slightly worse inflation report than expected just prior to the meeting of the central bank committee. One reason was that inflation, which was flaring because of pressure on oil prices, had not been spreading in the economy. The BOE didn't see a reason to raise interest rates to stop a spread that wasn't occurring, and the MPC knew there was no reason to raise interest rates to roll back oil prices because interest rates would have no effect on oil prices, which were rising globally for completely different reasons.

The decision to hold off on interest rates is certainly further justified as the CBI retail sales report for September shows a worsening in sales compared to a year ago, a worsening in orders, a worsening of sales for time of year, and a small pickup in the level of stocks that is arguably involuntary.

The changes on the month are in fact severe, and not technical, with sales compared to a year ago falling to -55 in September from -48 in August, while orders compared to a year ago posted a net reading of -62, down from -29, more than doubling their previous negative value. Sales for the time of year also fell severely to a net reading of -40 in September from -26 in August. These are massive changes in already negative numbers on a monthly basis.

The percentile standings for these values are also extremely low. Orders compared to a year ago are at the lowest value seen in data since December 2001. Sales compared to a year ago have been weaker only 1% of the time. Sales compared to what they normally do this time of year have a 4.4 percentile standing; they are weaker, less than 5% of the time. While the inventory number crawled higher, it has a 21.1 percentile standing. None of these figures inspire any confidence as to the shape of the consumer. And the outlook doesn’t get better either.

A survey of expectations also shows severe deterioration, not just deterioration, for October compared to September. Sales, compared to a year ago, dropped to a net value of -37 in October from -22 in September, carving out a 6.4 percentile standing, another extremely weak standing, this time for expected sales. Orders compared to a year ago logged a reading of -63 in October compared to -40 in September; this is another very sharp deterioration in view of severe weakness the month before. It’s another all-time low for the reading on data since December 2001. Sales for the time of year weakened to a reading of -39 in October from -29 in September, creating a 4.3 percentile standing, yet another bottom 5% standing, this time for expected sales for the time of year.
by:Robert Brusca
|in:Economy in Brief
Global| Sep 23 2026
S&P PMIs Five of Seven Early Reporters Show Stronger Output in September
Japan, a usual early reporter, has not reported early this month. But among the seven reporters, five show improved monthly performance in September compared to August. The United Kingdom and Australia are weaker on the month. The euro area, Germany, France, India, and the United States are better on the month. Four of seven reporters show queue standings for monthly readings that are above their averages of the past 4½ years. The U.S. composite queue standing is exceptionally strong, with an 89.7 percentile standing for its composite index in September.

Ironically, India, which has the lowest queue-ranking index, has the second highest diffusion reading among the September reporters, at 56.5. It is second only to the U.S. at 58.4. That result for India simply underscores how well India’s economy has done over the past 4½ years compared to everyone else. To flesh that out, over the past 4½ years India’s composite average has been 58.1; the U.S., 53.6; the U.K., 52.4; the euro area, 51.3; Australia, 51.1; Germany, 50.9; and France, 49.9. France is the only reporter in the table to have averaged a composite index that shows a net decline over the whole period.

These average rankings give you some idea of how weak the past 4½ year period has been. Both Germany and France also log manufacturing readings below 50, indicating manufacturing sector contraction on average. In the euro area, the average reading was 50.9—above breakeven of 50 but by less than one diffusion point—obviously weighed down by France and Germany. Australia is the only country that has an average services reading weaker than its manufacturing reading for the full period.

Sequentially, the manufacturing data are improving from 12 months to six months to three months. Services are close to that same phenomenon but on relatively flat numbers. Over the past three months, the composite index, manufacturing, and services are all steadily progressing higher when a simple average of the seven responses is collected. There are three sectors and seven countries sketching out 21 comparisons each month. August and September each have eight weaker responses out of 21, while July had only three responses of ‘weaker’ out of 21.

The queue standings, which rank the current index levels across sectors for the last 4½ years, show 14 of 21 readings above their respective means, that is, with a standing of over 50%. India’s standing is the weakest with all readings below 50%, but that is much more a statement about past strength than about current weakness. The U.K. and Australia each have two sectors below 50% in standing. For Australia, it is the composite and manufacturing; for the U.K., it is the composite and services. However, for all countries, manufacturing performance in September is worse than it was in January 2021.

As of September, there is still a good deal of manufacturing weakness in play, with four of seven early reporters showing manufacturing weaker monthly in September. Only the U.K. and Australia have weaker service sectors month-to-month.

On balance, the S&P PMI readings show that the global economy is still getting stronger despite inflation, rate hikes, and challenges posed by war and geopolitical tensions. However, we should not assume that progress will continue apace. To some extent growth has been maintained by running down stocks of scarce goods, and some stocks of needed items may now be low. Winter is coming, and with it will come the demand for a winter energy source. It is no time to get complacent.
by:Robert Brusca
|in:Economy in Brief
United Kingdom| Sep 21 2026
U.K. Housing Surveys and Consumer Sentiment Support the View of Weak Growth
The exhibits in this report feature a graph based on the RICS survey showing U.K. sales expectations for the next three months versus the last three months, while tabular data show Nationwide housing prices and how they are moving month-to-month as well as year-over-year. In addition, the table provides the recent GfK survey results on consumer confidence in the U.K. and presents rankings of housing prices and consumer confidence.

These statistics paint a somewhat mixed picture of the U.K. economy although clearly they paint a picture of an economy that is not firing on all cylinders. The ranking on year-over-year house price changes in the Nationwide survey and the ranking for the GfK consumer confidence index give highly similar relative signals, with both of them around the 30th to 40th percentiles in their historic queues of data extending back to 1992.

Housing prices are still advancing more slowly than they did in previous years. While consumer confidence is still low, it has shown improvement in recent months, and the last two readings showed year-over-year improvement in the monthly data. The RICS chart on the pace of sales shows some improvement, if not yet outright gains. Still, housing conditions are weak, and the question of whether they are limping back into the black, whether prices are holding on for small gains, or whether there is a more solid recovery taking place remain unanswered. So far, at least, it does not look like backsliding.
by:Robert Brusca
|in:Economy in Brief
Germany| Sep 18 2026
German PPI Shows Pressure, But It’s Limited
German inflation in August saw the headline pop while core remained copacetic. The difference between the two trends is like night and day.

Headline PPI Germany’s PPI spurted for the second consecutive month, rising by 1.2% in both July and August. These jumps followed a drop of 0.3% in June. The German headline PPI is up by 4.6% over 12 months, up by 12.5% at an annual rate over six months, and up at an 8.3% annual rate over three months. Those gains are largely driven by energy trends.

The core is a different story The PPI excluding energy in August gained by 0.2%, the same as in July, after a 0.3% rise in June. Sequentially, the ex-energy PPI rose 3.1% (SAAR) over 12 months, at a 5.0% annual rate over six months, and at a 3.3% annual rate over three months. That’s still excessive, but much less worrisome.

Sector stories The sectors, using unfortunately NSA data, show consumer prices moving lower over three months, with very mild, near-target overshooting for investment goods, while intermediate goods bear the burden of pressure. These observations are for the three-month annualized growth rates but apply equally to the 12-month growth rates.

The CPI for reference German CPI inflation, included in the table as a reference, shows roughly the same patterns as the PPI, with the headline growing in excess of the ECB’s EMU-wide target pace, overshooting by about a percentage point, while the CPI ex-energy skims along at a nearly acceptable pace of overshoot that ranges from 2.2% to 2.5% over three months, six months, and 12 months.

Inflation forces present but surprisingly contained Clearly, inflationary pressures are present in Germany and just as clearly, they are not spreading but have done their damage by the weight of energy in each sector. This does not mean there will not be progression or knock-on effects, just that, so far, they have not appeared. And part of this is because of ongoing economic weakness in Germany.

QTD Quarter to date (QTD), the German headline two months into Q3 has risen at an 8.3% annual rate as the ex-energy PPI runs at a pace of 4%. Both are too hot. Sector inflation rates on NSA data are acceptable except for intermediate goods where the pace rises to 5.3% in the quarter (energy, again). The CPI on a quarterly basis also generates a 3.2% headline gain against a core pace of just 2.2%.
by:Robert Brusca
|in:Economy in Brief
Europe| Sep 17 2026
EMU Inflation Pressure Remain over the Top but Not Intensifying
Inflation in the euro area rose by 0.4% in August after gaining 0.5% in July on the heels of a 0.1% decline in June. Sequentially, euro area inflation is up by 3.3% over 12 months, accelerates to a 4.5% annual rate over six months, and then settles back to a 3.4% pace over three months. Inflation is more excessive and stubborn than it is threatening.

Inflation excluding energy and unprocessed food rose a skinny 0.1% in August after a 0.3% gain in July and a 0.1% increase in June. This version of core inflation is up by 2.4% over 12 months and six months and then settles down to a 2.3% annual rate over three months. The ex-food, alcohol & tobacco core measure, similarly posted restrained monthly gains, with a sequential profile matching the ex-energy & ex-unprocessed food progression.

A cautious ECB On balance, headline inflation is too high largely because of energy, and this is not a surprise. However, core inflation is much closer to being in target. Still, it is excessive over 12 months, six months, and three months, but it's not even 1/2 of one percentage point too high at an annualized rate. Still, it is consistently higher by 0.3% to 0.4% on an annual rate. With energy prices flaring, the ECB is being careful.

Inflation pressure is not growing in breadth The details of inflation for the EMU 21-member inflation measure are similar to those headlines in the core inflation progressions. The details on inflation show that inflation is not broadly accelerating. Diffusion measures, which chronicle the proportion of categories with inflation accelerating, showed very restrained sub-50% readings for August and June, even though July’s relatively hotter increase showed inflation accelerating in nearly 85% of the categories. However, that bad-news month was sandwiched in between two good-news months. Looking at inflation over 12 months, six months, and three months, the diffusion progressions step down from 69.2% over 12 months to 53.8% over six months and to 30.8% over three months. Inflation's breadth has been pulling back progressively.

Inflation is consistently accelerating for furnishings, household equipment & maintenance, healthcare, and communications. However, those are the only three categories that show inflation consistently higher over 12 months, six months, and three months. Inflation is consistently lower over those three periods for alcoholic beverages & tobacco and for recreation & culture.
by:Robert Brusca
|in:Economy in Brief
Europe| Sep 16 2026
IP in EMU Shows Weakness Persists
The monetary union graphic seems to show some very gradual longer-term progress underway based on looking at the year-over-year trends by sector. However, the shorter-term trends in the table, for a year and under, are not quite so supportive of optimism.

Monthly Monthly data show that industrial production has really been fluctuating around a zero-growth rate for the last three months, with a July and June drop of 0.1% versus a May increase of 0.2%. Looking at manufacturing alone, there was a drop in July of 0.3%, a June drop of 0.3%, and a flat performance in May. None of this speaks of growing optimism.

Sectors The consolidated monthly sector results show output gains in May and June for consumer goods but a substantial 1.5% drop in July. Intermediate goods output declined in May and June versus a small increase in July. Capital goods output was simply ragged, with a 0.4% increase in May, a 1.8% decline in June, and a 0.5% increase in July; it's hard to know what to make of that choppy performance.

Sequential growth in output Switching over to look at the sequential trends, that is, the pattern of growth rates from 12 months to six months to three months, what you see for the headline series is output falling by 0.2% over 12 months, rising at a 2.3% annual rate over six months, and then going flat over three months. Manufacturing industrial production shows an erratic loss and gain, and then a loss over three months. Consumer goods are encouraging on this timeline, with output falling by 4.4% over 12 months, rising by 5.9% at an annual rate over six months, and accelerating to a 13% annual rate over three months. Both consumer durables and nondurables output show acceleration; this is a rare bright spot in this report. Intermediate goods output shows acceleration from 12 months to six months and then a step back from a six-month growth rate of 2.5% to a 4% decline at an annual rate. Capital goods have the same characteristics, with a 12-month and six-month gain on the books and then a 3.8% annual rate decline over three months.

Quarter-to-date trends Quarter-to-date data, which is a nascent calculation since this report is for July, show declines underway for overall output, manufacturing, intermediate goods, and capital goods. The consumer goods categories are all showing increases in the quarter to date to offset the weakness in intermediate and capital goods, but still not enough to put an increase into the headlines.

Percentile standings The percentile standings, which rate the growth rates in a historic context since late 2006, show that only intermediate goods have an annual growth rate that registers above its median, and even then, it only has a 54.2 percentile standing. Capital goods come close to a neutral standing with a 46.2 percentile standing but consumer goods’ annual growth rate is very weak and logs a bottom-10-percentile standing.

Country detail monthly Country detail is not very reassuring, with six monetary union countries showing declines in July, the same as in June, compared to seven showing declines in May. This is for a small group of 12 countries that we track in the table. The medians for this group show declines in May, June, and July.

Countries sequentially Tracking the sequential trends for these 12 countries produces eight declines over three months, six declines over six-months, and seven declines over 12 months. The medians for each span are negative growth rates, and the negative growth rates get larger from 12 months to six months to three months, not a reassuring development. Also, statistics on the percent of reporters accelerating are below 50% for all periods. Over three-months, 18.2% of the countries are showing acceleration compared to six months, while over 12 months only 9.1% of the reporters are showing acceleration compared to the previous 12-month period.

Percentile standing by countries: weakness prevails Among the countries, only four show industrial production with year-over-year growth rates above their historic medians. The Netherlands leads the pack with a 93.3 percentile standing, followed by Finland with an 81.9 percentile standing, Malta with a 55.5 percentile standing, and Spain with a 52.9 percentile. The three largest monetary union economies have industrial production with annual growth rates ranking in the 20th percentile for Germany and France, while Italy is in its 47th percentile.

Summing up The weak showing in the latest data embodies weak trends. Recent months are weak as well, but more in a floundering way than in a deteriorating way. But the three-month growth rates taken together show more weakness than floundering. It’s not a reassuring report.
by:Robert Brusca
|in:Economy in Brief
Global| Sep 15 2026
ZEW Current Situation Improves; Inflation Expectations Jump!
The ZEW financial experts in September see broadly improving macroeconomic conditions in the euro area, Germany, the United States, and China. There are step-ups in each of these areas, mostly by modest increases of four to seven points month-to-month. However, Germany shows a month-to-month increase of 14 points, the largest gain of the group. The percentile standings of the readings show an above-median (which means an above 50th percentile reading) for the euro area at a 59.8 percentile and for China at a 77.3 percentile. Both Germany and the U.S. lag their medians, with Germany at a 38.9 percentile standing and the U.S. at a 44.5 percentile standing.

Economic expectations are little changed and mixed among the three countries: Germany, the U.S., and China. The U.S. sees a slight setback as its monthly reading falls by 3.2 points; German expectations edge up by 0.5; China’s reading falls by 4.1 points. Only the reading for Germany stands above its 50th percentile, at the 59th percentile standing.

Inflation expectations are probably the big story this month, with big changes in all the reporting units of over 20 points on the month and all of them jumping up well over their median estimates, with rankings ranging from a 52.3 percentile standing in the U.S. to an 81.8 percentile standing in China. The outlook for inflation has suddenly worsened largely on events in the Middle East, rising oil prices, and increased pessimism about prospects for peace in the Middle East anytime soon.

Because of this short-term interest rate expectations are also higher, rising by 39 points in the U.S., 19 points in the euro area, and over 13 points in China month-to-month. All the readings for short-term rate expectations are above their medians, well above their respective 50th percentiles, with standings ranging from a low of the 71st percentile for the U.S. to the mid-80th percentile for both the euro area and China.

There are smaller increases, although increases in each of the areas, for long-term interest rate expectations, with the largest increases for the U.S. at 11.5 points on the month, whereas Germany and China log increases of about 3.8 to 3.9 points. Percentile standings show that long-term rate expectations are only above the 50th percentile standing for China, whereas for Germany they are at the 37th percentile. For the U.S., they are at the 44th percentile. Though the sharp increase in inflation expectations seems to have caught short-term interest rates off guard, longer-term interest rates have followed suit with only relatively small adjustments, not jumping to draconian levels, at least not yet. This would suggest that, with the rise in short-term expectations, financial experts think that central banks are still in control of inflation developments. That’s good news.

Not surprisingly, against this background stock market expectations deteriorated in each region. The smallest decline was in Germany, a decline of 4.4 points, while the largest was in China, a decline of 11.8 points. Germany is the only area where the stock assessments are below their 50th percentile. The euro area just makes the 50th percentile mark at 50.5. The U.S. comes in at a 58.3 percentile, while China has a 62.1 percentile standing assessment for the month. Generally speaking, the acceleration of inflation expectations has created some setback on stocks but hasn't had a draconian impact there either.

The outlook is that the economic situation has improved slightly in the month and economic expectations have a mixed performance and are generally slightly subpar. Inflation expectations jump sharply and have had a big impact on short-term rates, a more moderate impact on long-term rates, and a modest impact on stock values. Because of the sharp one-month rise in inflation expectations, we're going to want to watch these developments very closely.
by:Robert Brusca
|in:Economy in Brief
Japan| Sep 14 2026
Japan’s IP Shows Developing, Solid Uptrend
Japan’s industrial production rose in July largely on a jump in gas & electric utilities output. But manufacturing IP made a small move backward, with output falling by 0.1% month-to-month. Consumer goods output did turn sharply lower in July, dropping by 1.3% month-to-month, but intermediate goods output advanced by 0.2% as capital goods output continued to gear up, rising 3.2% month-to-month after rising 5.5% month-to-month in June. These gains in capital goods output followed a 3.1% drop in May.

Overall industrial output sequential gains show an accelerating output trend. The 12-month gain is 3.6%, the six-month annualized gain is nearly identical at 3.5%, and the three-month annualized gain is at a hefty 9.7%.

Sequential trends in manufacturing show more fluctuations and less of an arrow-straight trend. For manufacturing, 12-month growth is 4%, while three-month annualized growth is 8%. There is a lull in between, with six-month growth showing a 0.2% annual rate decline. Manufacturing sectors generally show a similar pattern, with solid 12-month growth, weaker growth over six months, and a pick-up over three months, with the three-month pace rebounding and turning sharply stronger than its 12-month pace. We see that for intermediate goods and capital goods, with only consumer goods showing steady output deterioration from 12 months to six months to three months. Yet, as the graphic shows, retail sales are holding up and tracking with industrial output gains overall.

On a quarter-to-date basis, very early in Q3, output is rising at a 12.3% annualized rate over its Q2 level. Manufacturing output is up at a 7.6% pace. Consumer goods output is a drag, with output falling at a 5.1% annual rate, offset by a 5.4% gain in intermediate goods and capital goods output exploding at a 40.1% annual gain. Utilities & mining output also are rising clearly and strongly in the quarter.

However, Japan’s economy is still in recovery mode. As the table clearly shows, all IP measures are lower than they were one year ago. The economy is still digging out after retrenchment. Moreover, output is still broadly weaker than it was in January 2020 before COVID struck. That’s a long time for output to not have risen, 6½ years. On that comparison, only investment goods output and electric & gas utilities output are higher in July of this year than in January 2020, and in both cases it is by less than 2%.
by:Robert Brusca
|in:Economy in Brief