Europe Energy Squeeze, U.S. Inflation, China Omicron: Eco Day

(Bloomberg) -- Sign up for the New Economy Daily newsletter, follow us @economics and subscribe to our podcast.

Welcome to Wednesday, Europe. Here’s the latest news and analysis from Bloomberg Economics to help you start the day.

• The coronavirus isn’t going to be public enemy No. 1 for the global economy this year: The biggest dangers will stem from inflation and the risk that policy makers will call the post-Covid recovery wrong, Stephanie Flanders writes
• Soaring energy prices are putting the squeeze on European consumers desperate for some relief after two years of coronavirus, lockdowns and job worries
• Fed Chair Jerome Powell said the central bank can pull off the tricky task of bringing down four-decade high inflation without damaging the U.S. economy
• France’s economic recovery is proving almost immune to disruption from omicron and is set to get extra support as supply constraints start to ease
• U.K. households’ perception of their financial wellbeing declined at the fastest rate since the start of the pandemic as savings dwindled and incomes dropped
• An omicron outbreak in China is sending jitters through supply chains as manufacturers and shippers brace for disruption inside the world’s-biggest trading nation if it can’t contain the fast-spreading variant
• When it comes to the path of U.S. inflation, economists say things are about to get worse -- but after that, they should get better
• Two Fed officials backed raising rates as soon as March and a third called for a reduction of the balance sheet
• Bloomberg Economics’ daily U.S. GDP tracker suggests a short, sharp drop in activity from omicron, followed by a recovery fast enough that a rate hike could still be in play at the FOMC’s mid-March meeting
• Goldman Sachs cut its forecast for China’s economic growth to 4.3%. China’s inflation pressures moderated in December, giving the central bank scope to cut interest rates

©2022 Bloomberg L.P.

With assistance from Bloomberg