Europe Headed for Recession

How Consumers Are Dealing With Inflation | Taxes on I Bonds in 9 Common SituationsTaxes on I Bonds in 9 Common Situations | Created for {EMAIL} | [Web Version]( July 18, 2022 CONNECT WITH KIPLINGER  [LinkedIn]( [Facebook]( [Twitter]( [Instagram ]( [Youtube]( [SIGN UP]( ⋅ [WEBSITE]( [] What's in the Works [] Europe’s economy is in for a rough time, according to the latest issue of The Kiplinger Letter. While recession risks have mounted in the U.S., they’re considerably higher in the group of nations that use the euro currency. For now, tourism is keeping the eurozone economy afloat, but serious downturn is likely to begin there before this year is over, with ripple effects far beyond the continent itself. European inflation is at a 40-year high, much like in the U.S. Soaring costs of food and energy hit Europe especially hard, given their reliance on imports of Russian oil and gas, and foodstuffs from Ukraine. Inflation is unlikely to peak in the eurozone before Oct., whereas the U.S. should see the worst of price increases earlier, with June a possible high-water mark. Expect the European Central Bank to start raising interest rates next month to tamp down inflation and to support the value of the euro. But it will proceed slower than the Federal Reserve is moving, and will likely halt its rate hikes early next year. [Your Blueprint for Passive Investing in Real Estate]( You've worked hard to get to where you are today. It's time to begin thinking about investing and expanding your wealth. That's where passive investing comes in. But where do you begin? [This exclusive resource will help you get started.]( ADVERTISEMENT [] Continued [] The biggest threat to Europe later this year: Shortages of natural gas. Russian gas exports to Europe were already down by 70% in late June. The pipelines that carry most Russian gas to the continent are closed now for regular maintenance and may not reopen on time, or at all, if Russian President Vladimir Putin decides to play hardball. Without Russian gas, European countries simply can’t meet all their needs. Even modest gas rationing is likely to push the eurozone into recession. Gas-intensive industries could face large-scale shutdowns. Think glass, steelmaking, chemicals, fertilizer—vital raw materials, in other words. Lost output will affect manufacturers, farmers, and ultimately consumers, around the world. A survey showed that half of consumers are dealing with the rising costs of inflation by cutting back on dining out, and a third are reducing purchases of gas, groceries, clothing, entertainment and recreation. A fifth cited other discretionary purchases, such as travel, home furnishings and household goods. Where consumers are cutting back the least: healthcare and rent/mortgage. Prime Day sales rose 8.6% this year to $11.9 billion according to Adobe Inc. Sales rose both at Amazon and at competing sales at Walmart, Target and Best Buy. Toys were discounted the most at 15%, clothing at 12% and electronics at 6%, on average. This may indicate where retailers feel they have the most excess inventories. Expect lackluster back-to-school sales this year, and continued discounting into the holiday season. More retailers will find that after frantically trying to rebuild inventory after getting caught short last year because of the shipping crunch, they now have too much. Free download, [The Kiplinger Letter's Forecast](. No information required from you. [Your Blueprint for Passive Investing in Real Estate]( You've worked hard to get to where you are today. It's time to begin thinking about investing and expanding your wealth. That's where passive investing comes in. But where do you begin? This exclusive resource will help you get started. [Read More]( ADVERTISEMENT [] Also on Kiplinger [] - [Taxes on I Bonds in 9 Common Situations]( - [How to Get Ahead During a Market Downturn]( - [Is Inflation Costing You More as a Retiree?]( - [Amazon Prime Day Is Over, But AMZN Stock Is Still a Steal]( - [Sign up free for A Step Ahead: Guidance on how to navigate today’s challenges to business, the economy, and financial markets.]( ABOUT KIPLINGER When we write about money, we get it right. So the decisions you make with your dollars are also right. Since 1920, Kiplinger has earned a reputation as a trusted provider of unbiased financial advice, objective business and economic forecasts, and practical help to millions of business professionals, investors, and individuals seeking to make more profitable decisions with their money. Our [flagship publications]( include Kiplinger’s Personal Finance magazine, The Kiplinger Letter, The Kiplinger Tax Letter, Kiplinger’s Retirement Report, and Kiplinger’s Investing for Income. All are regarded as the leading publications in their respective fields. Every day, millions of readers rely on our [free e-newsletters]( and [podcasts]( for help on everything from getting the best rate on a mortgage or car loan, to managing their businesses in an uncertain world, avoiding an IRS audit, building wealth for a secure retirement, or investing wisely in any kind of market. Now it’s your turn to reap all the rewards Kiplinger has to offer. Visit [Kiplinger.com](, your gateway to all of the above and much more. Check in any time for our latest advice on how to make more money, and keep more of the money you make. Stay right on the money, with Kiplinger. [Sign Up]( | [Print Publications]( | [Unsubscribe]( [Privacy Policy]( | [Cookies Policy]( | [Terms and Conditions]( CONTACT US: [FEEDBACK](concat('mailto:',$brief_feedback_email)) | [ADVERTISE]( Future US LLC © 1100 13th St. NW, Suite 1000, Washington, DC 20005