Ralf HallerRalf Haller August 27, 2008

US Economy UP, Europe Down, an overnight change – really?

Perception is everything in marketing and branding. It seems the exact same is true with economic forecasts. Just last week the overall perception was that the US is up for a recession (awaiting still the full impact of the financial services and housing crash) and while Europe is growing slower compared with a few months ago things look much brighter.

Now suddenly the US dollar goes up against the Euro and also the oil price rises again. Something not seen in quite a while and quite unusual. Market analysts talk the Euro economy down, supported by consumer and company indexes in Germany that show its lowest level in 3 years.

Of course this all makes no sense at all. It is looking at it with the perspective of half a glass empty rather than full. Surveys in the US show that more people are seeing the economy getting better now but at the same time there are 40% of people who say they had cash flow problems in the last 90 days and still 30% think the economy is getting even worse. So it is clear that opinion makers are at it here. If in Europe a survey would reveal such numbers, I think we would consider this as the worst economic downturn since World War II or so…

Warren Buffet is buying US dollars. Ok I would too since the Euro got way too high. But to think now that the one economy is up and the other is down overnight makes no common sense.