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Eurozone Growth Hits 6-Year Low
The eurozone’s economy slowed sharply in 2019 as factories faltered and its automobile industry struggled. The bloc’s economic weakness also reflects longer-term problems, including an aging and stagnant population, a weak presence in faster-growing digital sectors and problems coordinating responses to challenges across its 19 member countries. Economists don’t expect much of a pickup in growth in 2020, although the manufacturing sector is expected to steady as global trade flows level out. But economists caution the economy could slow further if trade tensions with the U.S. escalate and the U.K.’s departure from the European Union on Friday generates uncertainty, Paul Hannon reports.
The numbers: Eurozone gross domestic product rose at an annualized rate of just 0.4% in the three months through December, its weakest expansion since the first quarter of 2013. For the entire year, growth was 1.2%.
The U.S. economy, meanwhile, headed into 2020 on a solid footing, with growth settling back to the roughly 2% pace that has prevailed during the decade-old economic expansion.
WHAT TO WATCH TODAY
U.S. consumer spending for December is expected to rise 0.3% from a month earlier. (8:30 a.m. ET)
The U.S. personal-consumption-expenditure price index excluding food and energy for December is expected to rise 0.2% from a month earlier and 1.6% from a year earlier. (8:30 a.m. ET)
The U.S. employment cost index for the fourth quarter is expected to rise 0.7% from the prior quarter. (8:30 a.m. ET)
The Chicago purchasing managers index for January is expected to tick down to 48.5 from 48.9 a month earlier. (9:45 a.m. ET)
The University of Michigan’s final consumer sentiment index for January is expected to hold steady at 99.1. (10 a.m. ET)
The Baker Hughes rig count is out at 1 p.m. ET.
The U.K. leaves the European Union.
TOP STORIES
Fallout
The global economy in 2019 posted its worst year of growth since the financial crisis. Fallout from the coronavirus now has markets skeptical of a quick rebound. After weeks of hoping that a trade detente would buoy the world economy, investors have retreated from wagers on commodities and emerging markets dependent on Chinese consumption, Amrith Ramkumar reports.
China’s manufacturing cooled in January as factories shuttered for the Lunar New Year. The official manufacturing purchasing managers’ index landed right on the 50 mark, which separates expansion from contraction and indicated a stagnation of activity. The survey, conducted before Jan. 20, hasn’t fully reflected the impact from the coronavirus outbreak.
Coronavirus quarantines could extend the Lunar New Year slowdown and ripple through global manufacturing. China now makes up more than twice the share of global merchandise exports it did in 2003, when the SARS virus hit. And it is not just China’s size that makes it important. Global supply chains are considerably more complex. Evidence from previous unexpected supply shocks is discouraging. General Motors shuttered U.S. and European plants after earthquakes in Japan in 2011 and again in 2016 because vital parts suddenly became unavailable. Research published in 2015 suggests that as much as 60% of the total economic impact of Japan’s 2011 earthquake in terms of value added was borne by other countries. The current lockdown is of a scale beyond either SARS or the earthquakes in Japan. China’s industrial heft leaves global manufacturers in a quandary with no obvious parallel, Mike Bird writes.
The World Health Organization declared the coronavirus outbreak a public-health emergency of international concern. The designation, pointing to an increase in the number of cases, indicates that international public-health authorities now consider the respiratory virus a significant threat beyond China. The move could further heighten the global response to the outbreak, Brianna Abbott, Katie Camero and Erin Mendell report.
U.S. Commerce Secretary Wilbur Ross said disruptions in China could help bring jobs to America. “The fact is, it does give businesses another thing to consider when they do a review of their supply chains,” Mr. Ross said Thursday on Fox Business. “I think it will help to accelerate the return of jobs to North America, some to U.S., probably some to Mexico as well.” Critics quickly criticized the comment as insensitive to China’s plight, Bob Davis reports.
Lust for Life
U.S. life expectancy increased in 2018 for the first time in four years. Lower mortality from cancer, accidents and unintentional injuries were the main reasons, according to a report from the Centers for Disease Control and Prevention. Drug overdose deaths among U.S. residents fell 4%, the first such decline in 28 years. Public health experts said the figures were a step in the right direction but cautioned that the improvements are small, and still leave the U.S. behind its recent longevity peak. Among the top 10 causes of death in the U.S., only two increased in 2018: suicide and influenza/pneumonia. America still lags behind its peers in advancing life expectancy despite spending far more money on health care, Janet Adamy reports.
Adieu, Adieu, to EU and EU and EU
The U.K. takes a historic step on Friday and leaves the European Union after 47 years. When Saturday dawns, few people will notice the difference. Thanks to a transition period included in the withdrawal agreement, most practical arrangements for people and companies will remain unchanged until at least the end of 2020. It is only at the end of this transition, which could be extended, when most people and businesses will notice the shift. How much changes depends on what the two sides negotiate in the meantime, Laurence Norman and Stephen Fidler report.
WHAT ELSE WE’RE READING
Women who break glass ceilings are more likely to end up with broken marriages. “We compare the relationship trajectories of winning and losing candidates for mayor and parliamentarian and find that a promotion to one of these jobs doubles the baseline probability of divorce for women, but not for men. We also find a widening gender gap in divorce rates for men and women after being promoted to CEO,” Olle Folke and Johanna Rickne write in the American Economic Journal: Applied Economics.
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