Not long ago, almost all leading economies faced the same challenges – the risk of a recession, rising energy prices, and galloping inflation. However, some of them managed to improve the situation, whilst others saw only the worsening of economic conditions. For instance, the US economy is now quite resilient thanks to the effective and prompt measures taken by the government and the central bank. The country may even engineer a soft landing, whereas Europe is likely to slide into a recession.
Analysts at Bloomberg drew a conclusion that Europe would hardly avoid a recession, while the US economy could easily withstand the current threats. The new outlook is strikingly different from the previous ones. Earlier, analysts reckoned that inflation fueled by the pandemic would be more disastrous for the United States than for the bloc. However, the energy crisis tipped the balance. Besides, the economic conditions in the EU are aggravated by huge money injections to support households and businesses amid the energy crunch. To mitigate the crisis, the government decided to provide financial aid for economically vulnerable households and firms.
Bloomberg emphasizes that the main reason for soaring inflation in Europe was the shortage of Russian gas, which triggered an uptick in electricity prices. In the US, consumer spending and a tight labor market boosted inflation. As a result, the EU is dealing with more challenges now as it is still unable to tackle the energy crisis. The majority of analysts are confident that the eurozone will inevitably slide into a recession, while the United States may avoid a severe economic downturn.
