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| Jan 08 2026
EU Indexes for EMU Weaken at Year-End
The EU indexes for December 2025 showed slight slippage as the overall index fell to 96.7 from 97.1 in November for the whole of the European Monetary Union. Sectors showed slippage in consumer confidence and retailing; confidence slipped to -13.1 in December from -12.8 in November as the retail rating slipped to -7 in December from -6 in November. The services sector and the industrial sector were each unchanged on the month, with the industrial reading at a net standing of -9 and the services reading at +6. Improving month-to-month was construction where the index rose to a -1 in December from -2 in November.

Queue standings of sectors The queue (or rank) standings for the overall reading as well as the sector readings largely cluster around the lower one-third of the range of values on data back to 1985, where applicable. Retailing and construction are exceptions, with retailing at an above-median standing at a 51.3 percentile and construction at a solid and strong 81.6 percentile standing in December. The weakest reading is for consumer confidence at the 23.1 percentile standing followed by the industrial sector at a 30.5 percentile standing; services check in at a 37.9 percentile standing. The rank standing for the overall monetary union is at 34.4%, just slightly above the bottom one-third mark for all ranked observations over the period.

Country results 18 countries report detail in this survey. Seven of the 18 showed declines in December; this is up substantially from November when five showed declines and compares to October when eight countries showed declines. An unfortunate feature of December is that the headline reading for the monetary union weakens as well as readings for each of the four largest monetary union economies Germany, France, Italy, and Spain.

The two largest monetary union economies, Germany and France, have the weakest rank standings among the BIG4 with Germany at a 15.7 percentile standing and France at a 29.5 percentile standing. Italy and Spain each have standings above the 50% mark placing them above their medians for Italy with a reading of 54.2 percentile, while for Spain it's a 61.2 percentile standing.

Standings across smaller economics Across the remaining monetary union countries, six of the 14 readings are above their 50th percentile, while eight of the 14 are below their 50th percentile. Well, the large countries are experiencing a significant split; the rest of the monetary union appears to be in much the same condition, with approximately half of them performing at above-median conditions and half performing at below-median conditions.

Country stories The chart of the monetary union indexes by sector shows us that there has been little change and little trend in these observations. Across countries Germany has definitely been the weakest country among the BIG4, while Italy has been the strongest. Inflation data have showed inflation beginning to heat up in Spain, and Spain does have the strongest queue standing among the four largest monetary union economies - so that might be something to keep an eye on going forward. Conditions in Germany and France are still quite weak and seem unlikely to force an increase in inflation.

Smaller economies- some specifics And so, the rest of the monetary union economies show tiny Malta, which is hardly a price-maker, has a strong 99.6 percentile standing, followed by 70th percentile standings in Greece and then Lithuania. Portugal and Cyprus have readings in their 60th percentiles. For the most part, these are modest readings but above their medians, of course. Among the weak economies in the rest of the union, the weakest is Belgium with a 16.9 percentile standing, followed by Estonia at a 28.4 percentile standing, Luxembourg at a 32.8 percentile standing, and Austria at a 33-percentile standing. After that, Finland’s standing goes to 37.7 percentile with the Netherlands, Slovakia, and Latvia all with readings in their 40th percentiles indicating moderate undershooting relative to their respective medians.
by:Robert Brusca
|in:Economy in Brief
Global| Jan 07 2026
Inflation in the Euro Area Is Warm but Well-Behaved at Year-End
Inflation in the euro area as 2025 draws to a close has pretty much behaved. The HICP gauge for the European Monetary Union, that's targeted at a pace of 2% is closing the year with a 12-month pace of 2% which is exactly what the ECB is looking for. Success is at hand! Congrats to the ECB!

It’s like the super bowl playoffs: a victory, but more games lie ahead However…oh yes there is almost over an ‘however’ or ‘none-the-less’ or some other insidious phrase inevitably is inserted to introduce a caveat… and that is this: over six months the headline pace is at 2.4% at an annual rate, and over three months the pace is at 2.2% at an annual rate. Still, the year-over-year inflation rate is how central banks normally are judged and it has come in right on target, and the ECB can claim a large measure of victory for that even as it faces the challenge for 2026.

Visiting 2% or setting down roots? At the same time, inflation is only closing in on the 2% target over other horizons. It has not generally proven itself to be stable at 2%, having spent most of its time at a pace above 2% for the past year as the chart shows.

So far so good... The monthly numbers have been encouraging with the December gain in the HICP at 0.2%. Germany logged a gain of 0.1%, month-to-month, France and Italy had gains of 0.2%, while Spain is at 0.4%. Spain, where inflation had been pretty-well contained, has now moved over to the rogue side of the ledger. Spain posted inflation at 3% year-over-year, at a 4.5% annual rate over six months, and at a 5.7% annual rate over three months. Other monetary union countries showed more disciplined patterns. For example, France has a 0.7% gain year-over-year with a 1.2% annual rate gain over six months, and a 1.1% annual rate gain over three months. All of them, of course, are gains well within the ECB's desired result for the union as a whole. Italy shows a tendency toward deflation at a 1.3% HICP gain over 12 months that shifts to a decline of 0.3% at an annual rate over six months, and to a decline of 1.9% at an annual rate over three months. The other troublesome country among the Big-Four economies in EMU is Germany where the 2% headline achievement over 12 months is right on top of the target the ECB seeks; however, it gets there with a 3.1% annual rate increase over six months and a 4% annual rate of increase over three months. Both of those gains, of course, are over the line and indicate accelerating inflation even as German inflation ends the year at 2% and is ‘seemingly’ compliant.

Core inflation is a slightly different animal Germany gives us an early look at inflation excluding energy. Italy and Spain give us core measures to look at early in the year. The December results show ex-energy inflation in Germany at 0.1% month-to-month, Italian core inflation at 0.3%, and Spanish core inflation at 0.2%. This followed a batch of similarly well-behaved numbers in November for these three countries (see Table). The core sequential inflation rates are generally better behaved for these three countries than for their headline rates. Germany's metric excluding energy comes in at 2.2% for the year but it accelerates at a 2.7% pace over six months and then it's back down to 2% over three months. Italy shows a compliant 2% pace over 12 months, then it slides to a 1.5% annualized over six months and slips further to a 0.7% pace over three months, echoing the deflation trend that we see in Italy's headline pace. For Spain, the core also exhibits accelerating inflation trends to join what it reports for the headline as the year-over-year core pace is at 2.6%, the six-month rate steps up to 3.1% annualized, and stays in that neighborhood at a 2.9% annualized rate over three months.
by:Robert Brusca
|in:Economy in Brief
Global| Jan 06 2026
S&P Total PMIs A Mixed Bag As 2025 Ends
The S&P total or composite PMIs demonstrated a tendency to weakness in December as 64% of the 25 reporting countries reported weaker readings in December than in November. However, even with that bit of bad news on the table, the number of jurisdictions that reported PMI readings below 50 indicating economic contraction had gone to zero, indicating that there were no contracting jurisdictions in December. That's an improvement from two contracting in November and three in October. In those previous months, for example, in October, only 36% of the reporting entities were weaker month-to-month; in November, only 40% were weaker month-to-month so the step up to 64% weaker month-to-month in December was a big step-up in weakness; however, it comes after a period when conditions had generally been improving and now that has stopped.

Sequential trends: 12-months to 6-months to 3-months Sequential data that look at performance over three months, six months and 12 months compared to earlier periods show that, over three months only 34.8% of the jurisdictions were weaker compared to six-months. Over six months only 26.1% were weaker compared to 12-months. However, 12-months was a period of treading water because over 12 months compared to 12-months ago, about 48% of the reporters were weaker indicating that conditions over the past year had been largely unchanged. But over shorter periods of time conditions had been improving.

Contraction is less common At the same time, sequential data showed that there has been an improvement in terms of the number of jurisdictions that are showing contraction because there were five of them over 12 months, four of them over six months and only two of them over here months.

Standings/rankings The queue percentile standings show eight jurisdictions below 50% which means that on data from January 2021, only eight of the twenty five reporters are below their median result for that period. Egypt, Kenya, Sweden, and the United States have percentile standings in their 90th percentile marking them as very strong composite standings compared to where they have been over the last five years. There were also strong rankings in a relative sense in Western Europe with the European Monetary Union in its 81st percentile, Germany in its 81st percentile, France in its 81st percentile, and Hong Kong in its 83rd percentile, indicating strength spread across various areas but concentrated in Europe. On the weak side, there are extremely weak readings that are offered by Qatar that has an 11.9 percentile standing, in India that has a 19-percentile standing, the UAE with a 31-percentile standing, and China with the 38th percentile standing. These are relative standings that is they are not a ranking of the PMI values compared to other countries, but rather comparing to each individual country over the whole time series of values since January 2021 with its own performance. China, for example, has a 51.3 composite reading for December 2025, and while that's roughly a lower 1/3 reading compared to where it's been historically, it isn't a particularly weak reading compared to what other countries are reporting in December 2025. China, for example, ranks 17th out of 25 countries (approx. bottom one-third position) reporting data in December 2025. In the case of China, its timeseries and cross-section standing are very similar in ranking terms.
by:Robert Brusca
|in:Economy in Brief
Spain| Dec 30 2025
Spanish Inflation Flares at Year-End
When inflation numbers come hot off the griddle, some part of them might stick to the pan. That's the case this month with Spain’s release of inflation in December. It provides us with the headline for the HICP measure, a headline to the domestic measure, and the domestic measure excluding energy. But it does not release the sector detail for the rest of the report.

However, based upon what's been released, it’s clear that inflation in Spain has picked up. The part of the core that we have in-hand, which is just the portion excluding energy, still appears to be fairly well behaved; however, its gain is still slightly excessive.

HICP trend Spain’s HICP measure in December rose 0.4% after rising by 0.5% in both October and November; those are hot numbers. That translates into a 5.7% annual rate over three months which is hotter than its pace of 4.5% over six months which in turn is hotter than the 12-month increase of 3%. The HCP headline for Spain has clearly been accelerating, the year-over-year rise is too-hot, and the shorter-term metrics are hotter still. This is not good news, and this is not a welcome progression.

Domestic inflation Looking at Spain’s domestic CPI conditions, we find that they are still on the hot side with December showing a headline gain of 0.3% but gains in October and November of 0.5% each, producing a three-month annual rate of 5.4%, which is hotter than its 4.2% over six months, which, in turn, is hotter than the year-over-year gain at 2.9%. And these patterns/results are very similar to the pattern and the readings for the HICP. The domestic inflation picture is too hot over 12 months and accelerating over the shorter periods.

Domestic inflation ex-energy: The CPI excluding energy is not as bloated as the HICP or the domestic headline, but it is still a reading on rough terrain. Over 12 months, inflation excluding energy rises at a 2.6% annual rate; that's above the 2% pace sought by the ECB for the community as a whole. Over six months, the reading ramps up to a 3.1% annual rate, again moving the wrong direction and a reading at 3.1% is simply too hot. Over three months, there's a slight deceleration compared to six months but still a rate that is too hot, at 2.9%, and stronger than the 12-month pace. Core inflation is better behaved than headline inflation and both the domestic and the HICP frameworks, but inflation is unruly overall and, for the most part, showing either acceleration or at least a 3-month pace stronger than its 12-month pace. None of this is what the ECB is looking for or trying to achieve.

Beyond the missing details The details of the Spanish report are missing for December because the data are too preliminary for the authorities to post. However, if we look at the sequential pace of inflation over 12 months, six months, and three months on a lagged basis, it is looking at data that are up-to-date through November rather than through December what's the numbers that are generally excessive and they show too much acceleration moving from 12-months to 6-months to 3-months. Over 12 months compared to a year ago, five of nine categories show inflation accelerating. Over 6 months compared to 12 months, four categories are accelerating. Over 3 months compared to 6 months, six of the nine categories are accelerating. These acceleration tendencies are worrisome.

In addition, over 12 months, six of nine categories have a pace above 2%. Over 6 months, six of nine categories have annualized gains above 2%, and over 3 months, the lagged data show six of nine categories with gains above 2%. Only apparel shows inflation tempered on all horizons (at or below 2%). Food, housing, transport, education and other all show above 2% inflation on all horizons.
by:Robert Brusca
|in:Economy in Brief
Sweden| Dec 29 2025
Sweden’s Trade; Exports Surge as Imports Recede
Swedish exports advanced month-to-month for the second month in a row while imports continued on a losing streak declining by 0.9% in November.

Exports have gradually been firming with exports falling by 6.1% over 12 months, rising at an annual rate of 4.8% over six months, and then rising at a 3.9% annual rate over three months. Exports are not on a steady acceleration path, but they have transitioned from a year-over-year growth rate that's negative to moderate positive short-term rates of growth.

Swedish imports, on the other hand, are weakening relatively sharply. Imports were down 4.4% over 12 months, down at a 1.2% annual rate over six months, and falling at a 17% annual rate over three months.

The global trade picture remains somewhat mixed. The Baltic Dry goods index, which is an indicator of global trade volume, has backed off of its highs but continues to post relatively steady volume indications. However, the S&P global manufacturing survey has been showing weakness; when manufacturing is weak, typically international trade is weak as well. Swedish trade may be picking up some of that weakness as well.
by:Robert Brusca
|in:Economy in Brief
USA| Dec 22 2025
Canadian Retail Sales Drop and Growth Falters
Canadian retail sales and other growth metrics appear to be weakening as the year draws to a close. Inflation has firmed up as well. Retail sales in October saw a month-to-month drop of 0.2% as supermarket sales fell 0.7%, month-to-month, clothing store sales fell 1.2%, and retail excluding motor vehicle sales fell by 0.6%. Overall real retail sales fell by 0.6% in October from September. This is the second consecutive month in which total nominal retail sales and retail sales in real terms both dropped month-to-month. Total retail sales and real retail sales both are declining over three months. Total retail sales at a -0.6% annual rate real retail sales-3.2% annual rate. Real retail sales are decelerating from a 2% growth rate over 12 months to a -1.7% annual rate over six months to a - 0.6% annual rate over three months. Real retail sales show more severe deceleration, growing by merely 0.1% over 12-months shrinking at a 3.8% annual rate over six-months and declining at a 3.2% annual rate over three-months.

Other indicators weaken Over three months housing starts show a sharp contraction, falling at a 60.6% annual rate, a clear ongoing deceleration from a -5.2% drop over 12-months. However other metrics show slightly more upbeat results: employment, for example, yields job growth still at 1.2% at an annual rate over three-months although it slowed from a 1.4% year-over-year gain. The all-encompassing leading economic index shows an actual step up to a pace of 2.9% over 3 months from 2.6% over 6-months and 1.9% over 12-months. Manufacturing and mining output also show gains and a sharp acceleration from their year ago pace; for manufacturing output fell 1.4% year-over-year then rose at a 12.1% annual rate over the three-months ended in September; mining and oil production speeded up from a 4.7 percent 12-month gain to an 8.1% annual rate over three-months. The manufacturing and mining statistics lag by one-month. Another positive sign for the economy is unemployment as the number of unemployed declines at a 0.7% annual rate over three months even though it rises by 5.5% over 12 months.

Ranking metrics We can also vet these various sector results by looking at the growth rates year over year and comparing that pace to what has happened historically back to 2014. These individual category ranking statistics provide better relative comparisons across components. On that basis, the weak sector is retailing with real retail sales having 11.3 percentile standing and overall nominal retail sales having a 22.5 percentile standing. The next lowest year-over-year ranking is from manufacturing at a 22.7 percentile standing, that compares to a 26.1 percentile standing for housing starts. The performance of employment fares relatively better at a 38.7 percentile standing, but that's still below the 50% mark, putting job growth below its median for the period. The number unemployed, however, has a 67.6 percentile standing which is above its median and, of course, not a good result because here we would prefer to see leaner numbers on unemployment changes. The year-over-year growth rate for unemployment is solid, in the top one-third of all of the growth rates of the employed that we've seen since January of 2014. For unemployment, at least the sequential growth rates show that the process of unemployment creation is not accelerating. On the positive side the leading economic index has a 78.9 percentile standing which is quite strong and the mining and oil production have a 61.7 percentile standing which is above their median for the period.

Further context? And, when we consider the ranking of these growth rates, we can also look at the progression of growth in the table, such as the mention I made above for unemployment. For example, housing starts have a weak year-over-year standing but they have a much weaker growth rate over three months Compared to 12-months…on the other hand, manufacturing has a weak year-over-year standing but over three months manufacturing output has stepped up growth considerably. No one statistic can create a profile of these industries which live in the real world and have multiple dimensions and where the trends may be dynamic, in flux, and hard to singularly characterize.

Got inflation? As of October, Canadian inflation had picked up to some extent, inflation in Canada had dipped below the 2% mark from April through August of 2025. In September and October, the year-over-year growth of headline inflation was in the 2.3 to 2.2% region. The CPIx which didn't get quite that low, that recently got down to 1.5% and 1.6% in late 2024 and was as low as 2.2% and 2.5% from March to May of 2025 has moved up. September and October price growth rate is up to the 2.8 to 2.9% pace with the core rate running in the neighborhood of 2.6% toward the end of the year after reaching a low just below 2% in November of last year.

Nothing dramatic but a tilt to more of what Canada wants less of Oh no there's nothing dramatic going on in Canada, the economy appears to be weakening to some extent, the retail sales numbers show the largest deceleration. Of course, Canada and the US continue to have a spat over tariffs, and their two leaders still appear to be somewhat antagonistic about how that process is unfolding. Some Canadian stores have even taken the action of removing form the shelves some goods from the US, particularly US alcoholic products. The step up of inflation is something to watch and does not pair well with the weakening in economic activity.
by:Robert Brusca
|in:Economy in Brief
United Kingdom| Dec 19 2025
CBI’s Distributive Trades Survey Weakens Sharply in December
The new UK Confederation of British Industry (CBI) survey on the distributive trades sector shows a sharp weakening of an already weak survey for December and for the outlook into January of 2026.

The month-to-month deterioration from November was widespread across metrics for retailing as well as for wholesaling for the current month as well as for the outlook. The monthly degradation is without exception across the board - omitting the inventory metric which is a different animal in any event since inventory building is sometimes involuntary.

The Retail survey Current conditions: In December, the retail survey for sales compared to a year ago, orders compared to year ago, and sales for the time of year (a seasonal adjustment metric), all worsened month-to-month. The November readings were weak and in December sales compared to a year-ago worsened by 12 points, Orders compared to a year ago worsened by 17 points month-to-month and sales for the time of year worsened by 11 points. These metrics for December are below their respective 12-month average by 6 to 13 points, as well for these categories. The rankings tell a stark story, year-on-year sales have been lower only 5.3% of the time, Year-on-year orders have been weaker only 5.6% of the time, while time of the year sales have been lower only 13% of the time. These are all extremely low-ranking metrics.

Expected Conditions: In January expected conditions have weakened month-to-month by amounts ranging from 33 points to 16 points depending on the metric. And sales and orders compared to a year ago as well as sales for the time of year each are weaker than their respective 12-month average readings by amounts ranging from 4 points to 23 points. The rankings on expectations are even worse than for the current metrics. Expected sales compared to a year ago rank lower less than 1% of the time, the same is true of orders. While sales for the time of year have been weaker 7.7 percent of the time.

Wholesale survey The rankings for wholesaling are even lower than for retailing across the current and expected metrics. The month-to-month degradation for the current readings ranges from 7 points to 17 points weaker while the reading degradation monthly ranges from 5 points to 16 points. Wholesale sales and orders compared to a year ago and sales for the time of year each rank below the 5% mark. The expectations for January shows expectations for the three categories each are at a 2.5 percentile standing or lower.

Summing up The distributive trades survey has all but crashed and burned in December. Over the last 26 years the average of the three current metrics’ rankings has been lower only 18 times. The average outlook ranking for the month ahead has been weaker only 5 times in the last 26 years (over 313 months). On a relative basis the expected sales/orders performance is more depressed than the Current results for January. The pooled rankings show current ranking over the past 26-years weaker only 5.8 percent of the time with expectations lower only 1.6 percent of the time. These are very weak metrics. It is surprising that the BOE is walking on eggshells to cut rates with mixed support for rate cuts amid such weakness. There is already a GDP decline in the monthly data for October. UK and inflation is still too high, but it is breaking lower at a relatively fast pace. Will the UK be the first economy down after Covid?
by:Robert Brusca
|in:Economy in Brief
Belgium| Dec 18 2025
Belgian Consumer Confidence - On the Rise, but Weaker Month-to-Month
Belgian consumer confidence has been on the rise since early this year, however, in December the index has taken a step backwards with a reading of -1 compared to a November reading of +2 and then an October reading of zero. The confidence indicator, on data back to 1991 has a ranking in its 78.5 percentile, marking it as a reasonably strong reading on confidence compared to its values over that period. On the whole the trend is still solid, the month’s step-back is small.

The Economic Situation Economic situation for the next 12 months is weaker in December on a reading of -28 compared to -26 in November. The assessment of the previous 12-months is weaker in December at -42 compared to a reading of -38 in November. The outlook is weaker and the recent legacy is assessed as being slightly weaker as well, than it was in November. The assessment of the economic situation for the next 12 months is weak at a 9.7 percentile standing and the assessment of the previous 12 months is also weak at a 23.4 percentile standing.

Price Trends Price trends are seen as higher over the next 12-months at a reading of 38 compared to 27 in November. The backward-looking assessment of price trends also has them stronger in December than in November at a reading of 58 compared to 56 in November. Both of these price trend assessments are high with the outlook reading at its 94th percentile and the backward-looking assessment in its 81st percentile. Price expectations hit their low mid 2023-late 2023 and have been on the rise steadily ever since. The price metric of ‘12-months ahead’ was at zero in April of 2024 but climbed to +19 by February 2025 and currently sits at a level of 38. Price expectations are well in gear to the upside in Belgium despite relative price stability in the Euro-Area.

Unemployment Concerns about unemployment elevated slightly in December to -9 from -10 in November but these are significant readings compared to, say, the 12-month-ago reading which is at a level of +32. The sense of backtracking here is extremely weak. The sense of progress on the part of survey respondents becoming more confident about the future is clearly the prevalent feature here. The December reading for unemployment in fact has only a 2.5 percentile standing, indicating extremely weak concerns about the prospects of unemployment ahead despite the minor month-to-month step-back.

Major Household purchase environment The environment for making major household purchases deteriorates slightly in December at -15 compared to -13 in November. This only puts the index back to where it was in October. The response to the question, ‘is it favorable to buy at present’ is unchanged from its November value at -19 and it has been stuck there for three months in a row. The outlook to make major household purchases in the next 12-months logs a weaker reading at -15 than its 12-month value of -13but is stronger than its 12-month level of -18. The reading for the ‘favorable to buy at present’ question, however, is weaker at a -19 compared to -14, logged 12-months ago. The environment for making a household purchase over the next 12-months has a 55.6 percentile ranking which is above its median, however, the assessment of ‘favorable to buy at present’ has only a 20th percentile standing significantly below its median reading (median readings occur at a ranking of 50%)..

The Financial situation The financial situation for the next 12-months is assessed weaker at -3 in December, compared to zero in November; it compares to a - 2 in October. The assessment 12-months ago was also -2 so this is a very minor deterioration comparing the financial situation of households with the last 12-months produces another deterioration at -8 in December compared to -6 in November and that compares to 12-months ago at -5 another deterioration. However, the backward-looking assessment has a 52-percentile standing which is above its median while the outlook reading of -3 has a 23-percentile standing which puts it in the lower quarter of all expectations on data back to 1991. The current situation is appraised at 20 a step-back from November and October levels as well as from 12-months ago. But the current appraisal also has a queue standing in its 65.7 percentile which has a comfortable margin above its median reading. Households clearly have concerns about their financial situation even though their outlook for making household purchases is above median and their concerns about unemployment are low. Currently, conditions appear to be construed as solid.

Savings Household savings over the next 12-months are weaker in December at a reading of 20 compared to 26 in November; they are closer to their 12-month ago reading of 21. December is still a relatively high reading, in any event, with a 91-percentile standing. The question, ‘is it favorable to save at present’ is unchanged in November compared to December at a reading of -28 although it is weaker than it was 12-months ago and the percentile standing at its 78th percentile, again, a firm reading for this metric.

Summing up - assessment The consumer confidence reading from the Belgian National Bank this month shows a slight set back month-to-month, however, there is a significant an improvement that has been underway that is quite clear from the chart. The concerns that consumers have seemed to be about their financial situation haven't translated into concerns about unemployment or their willingness to make major household purchases, with unemployment concerns very low and their willingness to make household purchases for the period ahead at essentially normal levels. Still, there is more concern about inflation that is percolating, which is interesting considering that overall inflation has been relatively stable and muted in the European monetary area.
by:Robert Brusca
|in:Economy in Brief
United Kingdom| Dec 17 2025
U.K. Inflation Moderates Open Door for BOE Rate Cut
U.K. inflation has moderated in November, posting a 0.1% drop on the HICP, a 0.1% gain in the CPI-H headline measure as well as a 0.1% gain in the CPI-H core (excluding energy, food, alcohol, and tobacco). The sequential trend in core inflation points lower and is eroding but continues to run over the 2% mark set as a target by the Bank of England for overall inflation (over 12 months). The headline is excessive as well but also eroding.

Sequentially the CPI-H gains 3.5% over 12 months, slows to a 2.8% annual rate over six months and then dips to 1.4% annual rate over three months. The CPI-H core rises by 3.6% over 12 months, ticks down to a 3.0% pace over six months, and then runs at a 2.4% annualized pace over three months.

The trend for the CPI core, and for the headline, both are quite good and would be completely consistent with the Bank of England cutting rates, a move that is widely expected – although the 12-month pace for each is excessive.

Not only is inflation showing signs of falling into the Bank of England's target zone, but the economy has been weak although the unemployment rate currently is only hovering around the 4% mark. Still, recent economic data have been weak, and the recent monthly GDP report posted a negative reading, further unsettling the outlook. The October monthly GDP change was estimated at -0.1% while the year-over-year increase in GDP in October produced a gain of just 1.1%. These metrics have put the U.K. economy on recession watch at a time when there has been a sharp revision in the budget process that will be much more constrictive. A sharp pullback in the manufacturing of motor vehicles is blamed for the sudden weakness in GDP in October. The three-month drop in GDP is the first such drop since December 2023.

Meanwhile, the headline and the core inflation statistics are progressing. The table calculates breadth statistics on how widespread inflation acceleration has been and we see that it has not been prevalent (over 50%) in September or November, although breadth did touch the 58% mark in October. Sequentially, inflation acceleration has been tamed: over 12 months (when it is neutral), six months, and three months. Over 12 months, inflation accelerated in only 50% of the categories. And inflation according to the CPI headline and in the core over six months continues to show deceleration to accompany narrowing breadth - only 8.3%. That reading indicates that there was more inflation deceleration than acceleration by a wide margin over six months. At 50%, inflation acceleration and deceleration forces are balanced. Readings below 50% indicate relatively more deceleration, and that is now the more common condition. Inflation acceleration is extremely rare across categories over six months and three months.
by:Robert Brusca
|in:Economy in Brief
Europe| Dec 15 2025
S&P Flash PMIs Weaken in December
The Standard & Poor’s PMI data seem to have taken a fork in the road in December as the previous strong trend toward improving has been reversed in December. Out of 24 sector changes across eight different countries (or economic regions), there are only 6 sectors that show improvement month-to-month in December. This is a sharp contrast to November when 10 sectors showed improvement and to October when 20 of 24 sectors showed improvement. The worm has turned, but is it a lasting turn or not?

The sequential data look at changes in the hard data (that's data through November) over three months, six months, and 12 months. They show a strongly weighted preponderance of sectors that are better, getting stronger, rather than getting weaker. Over three months, 9 of 24 sector readings get weaker compared to six-months. Over six months, every single sector gets stronger compared to 12-months. Over 12 months, 19 sectors get stronger compared to 12-months ago. Monthly data show that this impressive string of improving sectors shows that progress began to slow down in November and kicked into reverse in December.

As of December, the United Kingdom, which is a struggling economy, is the only reporting unit to show a stronger composite, stronger manufacturing, and stronger services. Apart from the U.K.’s strength, there's stronger manufacturing month-to-month reported in France, Japan, and Australia. And that's the end of month-to-month improvements in December. In November, there is a triple improvement in Japan with manufacturing, services, and the composite strengthening month-to-month. There are isolated sector improvements in manufacturing in Australia and in the U.K. There were also improvements for services in India as well as in services and in the composite index for France and in the European monetary union. Still, these are only 10 of 24 sectors in November.

The previous strong trend movement higher has left most of the readings as of December above their medians on data back to January 2021. Among the 24 headline and sector calculations, only six of them show standings below their 50th percentile since January 2021, which puts them below their historic median for that period. The service sector is below the 50% mark in the United Kingdom, Japan, and the United States, while the overall composite is below the 50% mark in the U.S. and in India, with India showing a below median manufacturing rating as well and the U.S. showing below 50% in services. The weaker U.S. data is a new and interesting feature with U.S. job data for November just reported and looking a bit stronger, despite a rise in the unemployment rate. The December S&P survey data, on the other hand, hint that such an improving trend may not last.
by:Robert Brusca
|in:Economy in Brief
Japan| Dec 15 2025
Japan’s Tankan Ticks Higher for Large Manufacturers
Tankan overview: Japan's Tankan report is an important quarterly assessment and outlook of the Japanese economy. Historically, the performance of manufacturers is considered to be the bellwether in this survey for performance of the economy. In the fourth quarter of 2025, the manufacturing index moved up to 15 from 14 in the third quarter. This compares to a value of 12 in the first quarter and a four-quarter average of 13.5. Since late-2006, the manufacturing index has averaged 5.3, marking the performance in 2025 as a substantial improvement from the long period where Japan struggled with deflation. On dated back to 2003, the manufacturing index has a standing in the queue of data in its 70.8 percentile, a reasonably firm reading.

Nonmanufacturers: The index for nonmanufacturers logged a reading of 34 in the fourth quarter compared to 34 in the third quarter and a reading of 35 in the first quarter of 2025; the one-year average for nonmanufacturers is 34.3, marking that sector as little changed over the course of the year. Nonmanufacturing in the fourth quarter has an index standing at its 97.8 percentile, marking it as an extremely high standing on data back to late-2003.

Nonmanufacturing details: Readings across the nonmanufacturing sector are above their respective one-year averages for all subsectors except transportation where the fourth quarter index backs down to 27 from an average of 30.5 and for restaurants & hotels that back down to a reading of 25 from an average of 39.3. The queue percentile standings for the subsectors show a good deal of strength with construction at a 98.9 percentile standing, services for businesses also at a 98.9 percentile standing, transportation - despite the back off from the average - is at a 94.4 percentile standing, and real estate and wholesaling are at 93.3 percentile standings on data back to 2003.

The Tankan outlook- The survey also produces an outlook. For large manufacturers for the first quarter of 2026, the outlook metric moves up to 15 from what had been 12 for the fourth quarter of 2025. The outlook for nonmanufacturers is flat month-to-month at 28, the same as in the fourth quarter. The outlook for manufacturing has a queue standing in its 78.7 percentile on data back to 2003, while nonmanufacturing has a standing for the outlook reading at its 98.9 percentile marking these outlooks as quite good.

The BOJ is watching- This is a survey the Bank of Japan will be looking at and assessing what policy should do and how strong the economy appears to be. On these data, the economy would appear to be firm, the outlook would appear to be solid, and if the Bank of Japan were to decide to pay more attention to inflation, the economy would seem to be in a position to absorb a rate hike without much difficulty.

Other-sized enterprises- Manufacturing: The survey also produces results for medium-sized and small-sized firms, as well as outlooks for medium-sized and small-sized firms (that are not presented in the table). The fourth quarter assessments of performance, however, show improvements for manufacturing in both medium- and small-sized enterprises; they also show rankings of medium-sized firms in manufacturing in their 85th percentile, the same as for small sized enterprises.

Nonmanufacturing: Nonmanufacturing for medium- and small-sized enterprises show improvements in the fourth quarter results and also demonstrates high rankings of those readings for those respective sectors.

Summing up: On balance, it's a solid Tankan report for Japan's economy and should provide reassurance to the Bank of Japan and to the current government that the economy is on solid footing as each looks at the situation and tries to assess the best policy options.
by:Robert Brusca
|in:Economy in Brief
Sweden| Dec 11 2025
The Curious Case of Swedish Inflation
Sweden’s inflation rate has developed into a very interesting oddity as headline inflation as measured by the harmonized index of consumer prices (HICP), that is used in Europe, has come to diverge sharply from the Swedish national rate of inflation measured by its national CPI. The HICP inflation rate is 2.2% over the last 12 months; Sweden’s national rate is up by only 0.2%. If we rank each of these two inflation rates on data back to 2001, the rank of the HICP is in its 72.2 percentile while the rank of the national CPI is in only its 19.4 percentile, the lower one-fifth of its historic range of national inflation rates. These two rankings occur over the same periods and so there's nothing about the periodicity that's responsible for this; there's simply very different performance over the recent span.

About measuring inflation The HICP was adopted in Europe once the monetary union was formed and the countries of Europe were not able to get together to decide how to treat housing costs, which are important element in the CPI. They had entered into CPIs in different countries in different ways at that point. In the United States, inflation statistics are often criticized because of the way the housing component fits into them. Housing has such a large weight in the U.S. inflation measure. U.S. housing costs consider the cost of running the house in terms of taxes and utility costs; they look at the rental equivalent values, and they also have an owner imputed rent for people who live in their own homes. Of course, owner equivalent rent is a made-up number; it's completely imputed. Because a lot of European mortgages are short-term and they reprice when the central bank changes its rate, it’s very important to be careful how interest rates are treated in the housing cost indexes in Europe. The central bank did not want to be in a position where it would be raising interest rates to fight inflation and causing inflation to be higher because they were raising the mortgage interest rates on homes and causing the cost of housing to go up. For this reason, the HICP measures do not include housing costs. As we can see in the Swedish details for this month, housing and fuel costs are down 3.1% year-over-year. If we look at the ranking of housing costs for year-over-year growth, we see that they rank in the lower 6.4 percentile and are one of the most important factors in driving the national CPI lower and, of course, that metric is absent from the HICP.

Inflation is always rife with controversy: All of this is simply just another way to point out that inflation, while we measure it and talk about it, it's a controversial subject. How we measure it does matter. However, for monetary policy purposes, if we construct a measure that is reasonable and if we follow it consistently over the years, it should give us good signals and a good way to measure inflation and engage monetary policy. Yet, very clearly, if there are two competing gauges, it could become a real problem to jump from one to the other because they track different circumstances.

The current state of Swedish inflation: Swedish inflation in November fell by 0.3% month-to-month after rising by 0.5% in October and falling by 0.1% in September. The diffusion, or breadth, of inflation acceleration was only 33.3% in November. It jumped up to 55.6% in October, but it had been lower in September at 33%. Looking at Swedish inflation over 12-month, 6-month, and 3-month periods, the HICP goes from 2.2% over 12 months to an annualized pace of 5.7% over 6 months and then back down to 0.5% over 3 months. The national CPI has the same sort of topography but different growth rates with the CPI up by only 0.2% over 12 months, accelerating to 1.5% over 6 months and then declining at a -0.9% annual rate over 3 months. Inflation diffusion over 3 months in the national index is only 11.1%, over 6 months it jumps up to 66.7%, and over 12 months it's at 44.4% which is below 50% marking inflation as having more deceleration than acceleration.

Controlled inflation: On balance, Swedish inflation appears to be under control using either method. The ranking for inflation by category shows high inflation for food & nonalcoholic beverages, education, other goods & services, and medical care. However, inflation is below its median pace and bears low rankings for clothing & footwear, housing, fuel & lighting, recreation & culture, and transportation. Inflation is always somewhat mixed across sectors. That’s another thing that makes it hard to pin down exactly what inflation is, because people who consume different baskets of goods are going to experience different inflation rates. However, Sweden appears to have its inflation situation under control whichever metric you look at. The chart makes it clear that after its spike during COVID, inflation has come back down to a reasonable long-term pace that appears to be close to something that the central bank would find acceptable. The recent rise in HICP inflation seems to be unwinding and year-over-pace is down to a moderate 2.2%.
by:Robert Brusca
|in:Economy in Brief