Johan Geeroms, Director Risk Underwriting Benelux at Allianz Trade: ‘America has started well this year. But very little is left of that hosanna atmosphere. Too many indicators are showing a decline.’ Geeroms takes a random catch. He cites US gasoline prices plummeting (-4.6% year over year, -17% year over year), retail sales down (-1% year over year), slump in industrial production ( -0.5 percent on a monthly basis, -1.1 percent on an annual basis), the same applies to capital goods orders (-1 percent in February). It is not for nothing that business confidence in the United States is currently at an all-time low.’
Real estate fallback
Geeroms also emphasizes the role of banks. “We are seeing a serious downturn in real estate. Banks’ exposure to this is great. This in turn fuels doubts about the soundness of the banking sector. Banks were already less eager to lend. As a recession approaches, this will only increase further. Many smaller banks, in particular, are in trouble. This touches the heart of the economic fabric. Millions of businesses depend on those banks. The banking sector is having a tough time and that’s why the business community is also having a hard time.’ Incidentally, a survey of US banks (by the Conference of State Bank Supervisors) shows that 94% of banks believe the recession has already begun.
“We see a serious downturn in real estate”
Unemployment benefits are rising rapidly
It was mainly the labor market that kept the US economy afloat last year. “Corona had created a serious imbalance. Once the recovery question came up, everyone was afraid they didn’t have enough people. There were people everywhere. Now we see normalization and setbacks. As a result, support for the economy is also crumbling. The growth of new jobs continues to decline. Growth in temporary employment is also declining. Especially in the technology sector, we have recently seen significant rounds of layoffs. They saw the storm come first. We will now see these rounds of layoffs on a larger scale. We see unemployment benefits increasing month by month.”
The Fed is late
The fact that the US central bank says it expects a mild recession this year only adds to suspicions about Geeroms. “They always lag behind the facts in their predictions. 2008 comes to mind. Even then, according to the Fed, a mild recession was a possibility. Shortly afterwards we were in the deepest economic crisis in decades.’
“We see unemployment benefits increasing month by month”
The entire world will feel the US recession, Geeroms says, although it also sees a single bright spot. ‘It can be assumed that the dollar’s decline will continue as the economy slows down. Energy prices and other commodity prices are quoted in dollars. This is good news for Europe. What could also have a positive effect for Europe is that the Chinese economy is improving. The resulting impulse will be limited. But every little thing helps.’