The Weekly Echo (07/01/25)

Happy New Year from all of us at Echonomics! 🎉

As we enter 2025, we’re thrilled to bring you this year’s first edition of The Weekly Echo! This week’s stories capture some of the most significant global economic shifts, from the UK’s surprising GDP comparisons and a challenging housing market to the eurozone’s economic struggles and Asia’s manufacturing slowdown. We’re here to break down these stories in the signature Economic Echo way.

Let’s dive into our top five stories shaping the headlines this week:

1. UK Falls Behind All 50 US States in GDP Per Capita

In a shocking comparison, new data reveals that the UK’s GDP per capita (total output divided by the total population) has fallen below all 50 US states. The GDP per capita of the UK is roughly $52,000, far below the US average of $85,000. Whilst it is commonly known that the US is growing its GDP per capita faster than most of Europe, it is lesser known that the poorest state (using GDP per capita), Mississippi, now has a higher GDP per capita than the UK of $53,000.

GDP per capita measures a country’s economic output divided by population, providing an average wealth or productivity per person. While useful for comparisons, it doesn’t account for income inequality or cost of living differences. It also doesn’t directly represent money in the hands of individuals, so it’s best viewed alongside other metrics. Nonetheless, this startling statistic underscores long-standing concerns about stagnating productivity, weak wage growth, and declining global competitiveness in the UK.

The news has reignited debates over the country's economic priorities as the UK grapples with inflation and a slow post-pandemic recovery. Critics are calling for urgent reforms to improve productivity, invest in skills, and modernise industries. The big question remains: Can the UK reverse this decline, or are we witnessing the onset of prolonged economic stagnation?

2. Eurozone Ends 2024 in Contraction

The eurozone ended 2024 with its second consecutive month of economic contraction, signalling shrinking economic activity across the region. Weak consumer demand (the amount households spend on goods and services) has slowed, while industrial output continues to decline in key sectors like manufacturing and retail. High energy costs, driven by reduced supplies and geopolitical tensions, have further strained businesses and households.

Germany, the eurozone’s largest economy, is particularly affected by rising inflation (a general price increase) and persistent supply chain disruptions. These issues have delayed the delivery of goods and increased costs for businesses, further dampening economic recovery. Political instability in some member states has also reduced investor confidence, compounding the challenges.

The European Central Bank (ECB) now faces a difficult balancing act. Keeping interest rates high could suppress inflation but risks deepening the economic slowdown, while cutting rates may reignite price instability. With fears of a recession (2 consecutive quarters of GDP decline) looming in 2025, the eurozone’s policymakers must implement coordinated strategies to stabilise the economy and support its most vulnerable sectors.

As the region navigates this turbulence, the effectiveness of these measures will determine whether it can avert a downturn or face prolonged economic challenges.

3. US Economic Resurgence

While the eurozone faces headwinds, the US economy is showing impressive resilience. Growth in the private sector (non-government businesses) has reached its fastest pace since the post-COVID reopening, driven by robust consumer spending and easing inflationary pressures.

This divergence between the US and other major economies highlights the effectiveness of certain fiscal and monetary policies in maintaining momentum. As Donald Trump prepares to begin his second term as president, the world watches closely to see how his administration’s policies will shape the economy in 2025.

4. Asia’s Manufacturing Slowdown Amid Trade Concerns

Manufacturing activity across Asia ended 2024 on a subdued note, with key economies such as China, Japan, and South Korea struggling to recover. Concerns over potential trade policies under the incoming US administration have further added to the uncertainty, leaving businesses bracing for possible disruptions. (We will cover trade policies in greater detail in the coming weeks once Trump takes office and announces any changes)

Geopolitical tensions surrounding semiconductor supply chains, rare earth minerals, and broader trade relations are driving unease. Policymakers in Asia are now shifting their focus to boosting domestic demand and strengthening trade partnerships to navigate these challenges in the year ahead.

5. UK’s Housing Market Slumps

The UK housing market experienced its sharpest monthly decline since 2008, with house prices dropping by an average of 2.5% in December. Rising borrowing costs, stagnant wages, and broader economic uncertainties have deterred potential buyers, weakening the market.

Developers are slowing down new projects, while first-time buyers face growing affordability challenges. Although some analysts predict stabilisation later in 2025, the short-term UK economic outlook remains modest at best, with ripple effects likely to impact the construction and retail industries early in the year.

Conclusion

As we welcome 2025, we hope this year will bring great news and a return to stability and growth for all. These stories highlight the interconnected challenges and opportunities that will define the year ahead. From the UK’s economic hurdles to global shifts in trade and manufacturing, it’s clear that bold decisions and innovative strategies will be needed to navigate this evolving landscape.

This marks the beginning of Echonomics’ first full year as a brand, and we couldn’t be more excited about what’s ahead. Big things are on the horizon, and we’re committed to bringing you the clearest, most engaging coverage of the stories that matter most.

Thank you for being part of our journey. Here’s to a year of growth, insight, and success for all of us!

Warm wishes,
Harry & Reika
Co-Founders, Echonomics