The Eurozone Falls into Recession as "Stimulus" Fails

Investor sentiment is overly optimistic, as indicated by the CNN Fear and Greed Index reaching “extreme greed” levels. However, economic surprise indexes have declined significantly in the same period, with the euro area experiencing a recession despite favorable factors. Massive government stimulus plans, such as the EU Next Generation plan, have failed to boost growth or productivity. The negative trend in economic surprise cannot solely be blamed on rate hikes, but also on the ineffectiveness of stimulus packages and negative real rates. Enormous stimulus plans have resulted in high inflation and poor growth instead of a strong recovery. Social programs have also failed to significantly reduce poverty rates. The weakening eurozone economy is a result of excessive government spending rather than rate hikes.