Today’s global economy is more interconnected than ever before. That can be very convenient in many ways – it allows us to import low-priced products, it makes tourism easier than ever, and so on. But it also means that investors right here in America can be impacted by actions that take place on the other side of the globe. And unfortunately, there are signs that the European economy may be heading for yet another recession- a development which would impact the US economy and many investment portfolios, as well.
Business activity in the euro zone fell unexpectedly in November, prompting concerns that the 17-nation bloc’s economic recovery is losing steam.
The flash composite euro zone purchasing manager’s index (PMI) fell to 51.5 in November, down from 51.9 in October, data from economic analysts Markit showed on Tuesday. Analysts polled by Reuters had expected a figure of 52.0.
While still above the 50-point mark that separates expansion from contraction, analysts worry the index is slipping in the wrong direction, particularly as it follows worse-than-expected third-quarter growth in the euro zone.
After the longest contraction in continental Europe in over 40 years, the region had pulled out of an 18-month stretch of negative growth in the second quarter of 2013
In the third quarter of 2013, however, the annual GDP of the euro zone grew by just 0.1 percent, marking a slowdown from an expansion of 0.3 percent in the second quarter, according to data from Europe’s statistics agency Eurostat.
The jobless rate, meanwhile, remained at a record 12.2 percent in September.
The European Central Bank is concerned about slowing growth in the region and cut rates to a new low of 0.25 percent last time it met in an attempt to stimulate the economy and counteract concerns over deflation.
What would it mean if Europe plunged back into recession? A lowered demand for American products and services could harm our own tenuous recovery. Weakened banks could stress the international financial system, threatening to cause market crashes across the globe.
Is your portfolio protected from market volatility? Are your retirement plans dependent on politicians and economists on the other side of the world? If you’re invested with typical Wall Street investment firms, chances are that the answer to both of those questions is “yes.”
It’s our opinion that you have worked too hard to watch your retirement plans be wiped away by a crisis on the other side of the world. We can help you protect yourself. Let us show you how to reduce your vulnerability to market volatility abroad and at home, as well as your exposure to taxes and inflation. We eliminate market risk; in the last decade, NONE of our clients have lost a single dime in the market. Prior gains can’t be lost, either. This is why our clients have averaged over 8% during the worst economic downturn since The Great Depression.
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