The challenges faced by the European and US economies have been broadly similar: pandemic-related disruptions, higher inflation, and large increases in central bank policy rates. But the performance of their economies has been quite different, as can be seen by the latest retail sales figures.
In July, sales rose by 0.7% over June in the US, while in much of Europe, sales actually declined. One key reason is the fiscal support provided to households, which was not only much larger in the US, but also more targetted towards lower income households. This is significant as this part of the populations tends to spend more of their income, while richer households tend to save it.
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