People place bets on when the next recession will arrive. It may surprise some, but even a serious publication like the Financial Times polled fifty economists about the US recession timeline. About 70% expect it to happen in 2023, with many pointing to a second quarter standstill; the speaker here questions that particular forecast.
Remember that a recession is defined by two consecutive quarters of negative GDP growth, driven by the Federal Reserve’s rapid rate hikes in the presence of high inflation. Last month the United States posted an inflation rate of 8.6%, just shy of a similar figure elsewhere.
There appears to be little public research on Spain’s path, yet the global economy faces the risk of cooling in autumn after a summer boom. The debate often drifts into questions about who starts such talk and whether it will erode public trust or push policy measures. Financial markets, now focused on ultra-low or negative rates, seem to anticipate a bold move by the ECB to push the official rate toward 2% within a year.
In this century, one universal truth holds: unknowns abound and certainty remains elusive. Still, there is no data here that lends credibility to fears. The current outlook suggests growth around 4% for the euro area, with about 2.6% for the wider region, and inflation easing gradually in the second quarter. Projections for 2023 hover near 3%, well above pre-pandemic averages, with no clear signal of an imminent recession.
Two points illuminate arguments that try to rationalize public mood shifts. First, rising social gaps persist, with 53% of Spaniards reporting difficulties in daily interactions. It is also notable that 35% cannot take a full week of vacation each year and 26% face social exclusion risk. These issues, intensified by energy and food costs, have reduced purchasing power for many years. The shopping cart — the two major price drivers — has climbed significantly.
The second point concerns the ECB’s normalization of policy, which has already included a shift away from net public debt purchases and the announcement of a rate hike of 0.25% in July. Two important nuances follow: the ECB may continue to buy new debt to manage risk premiums until the end of 2024, and interest rates have already risen, with market indicators confirming the move ahead of the official rate. If inflation slows in the second half, further tightening could be unlikely.
For those who must speculate, the suggestion is simple: diversify investments rather than chase headlines.
There is no new housing bubble on the horizon. The climb in property prices has been steady enough to avoid repeating past crises, and the distresses of 2008 remain in memory.
Two metrics align to reveal the current reality of Spain’s housing market. Home sales are recovering, and prices have risen across several regions for five consecutive quarters. The INE price index places new homes at about 139 relative to 2015, still far from the 152 peak seen in 2009, while second-hand homes sit around 136, away from the 169 peak before the bubble.
Beyond price levels, a meaningful distinction stands out. Today the market favors resale housing and rental demand, not new construction. Annual new housing starts are well below a hundred thousand, while 2008 saw approvals for around 600,000 new flats. This shift matters because limited land and policy obstacles hinder high-cost young buyers who lack family support from securing mortgages, pushing many toward rentals or existing homes and cooling demand for new builds.
The current sentiment across observers is mixed. Pessimism looks tempting because the future feels uncertain and past trends haunt decisions. Yet the risk persists that some countries may engage in strategic debt moves, similar to past episodes where markets attacked certain currencies. Those moves are driven by speculation as much as by solid fundamentals.