Economy Watch: A Long, Hot Summer for the Euro Zone

It's going to be a busy month in the euro-zone, one way or another.

It’s going to be a busy month in the euro-zone, one way or another. On Wednesday, the European Central Bank’s governing body is going to meet to consider a rate cut from the current 1 percent. That might not happen this time around, but there’s always the next meeting in July, when economists believe there’s some chance of a 0.25 percent rate cut in reaction to whatever the Greek electorate is going to do. The Bank of England is also meeting this month to consider rate cuts and a UK QE.

The next round of Greek elections is on June 17. The nation currently has enough bailout money to last until June 30, with anything after that depending on the Greek parliament approving new austerity measures. Considering that no one knows exactly what the Greek government is going to look like after the election, all bets are off on a continued bailout, a default or a euro-zone withdrawal.

There will also be a lot of governmental and trans-governmental talk, confabs and jawboning this month in and about the euro-zone. The G7—their finance ministers and central bankers—will have emergency meetings and the G20 will have a summit. Euro-zone finance ministers will meet. The IMF will report on Spain banks, and results of the stress tests of the big Spanish banks will also be out in June.

Employment Trends Index sees uptick

On a mildly positive note, the Conference Board’s Employment Trends Index, which always comes on the heels of the monthly jobs report, increased 0.29 percent in May to 108.34, up from the revised figure of 108.03 in April. The May 2012 figure is also 7.6 percent higher than a year ago.

The month-over-month increase was driven by positive contributions from five of the index’s eight components. The improving indicators—beginning with the largest positive contributor and descending from that point–were Percentage of Firms with Positions Not Able to Fill Right Now, Initial Claims for Unemployment Insurance, Number of Employees Hired by the Temporary-Help Industry, Job Openings and Industrial Production.

“While growth in employment has slowed significantly in recent months, the Employment Trends Index does not signal further slowing in the coming months,” Gad Levanon, director of macroeconomic research at the Conference Board, noted in a press statement. “Employers have been very cautious in hiring in the past two months, but at the moment economic activity in the U.S. is just strong enough to require a modestly growing workforce.”

Gas prices continue their slide

The rocky road to recovery has a few silver linings for U.S. consumers. Probably the most noticeable is the price of gas, which has been headed down for a few weeks and seems likely to continue its slide as the price of crude oil drops. Theoretically the drop will free up consumers to buy other things, though if the current mini-panic about Europe grows into something deeper, Americans might react as they did during the worst of the recession, and start saving more and paying down debt.

In any case, AAA reported that the U.S. average for a gallon of regular was $3.585 on Monday. A month ago, the average was $3.792, and a year ago the average price was roughly the same, at $3.783. The West Coast and certain eastern states such as Illinois and New York currently have the highest regional averages, while most of the South has relatively low gas prices.

After its nervous day on Friday, Wall Street didn’t know which way to go on Monday. The Dow Jones Industrial Average lost a scant 17.11 points, or 0.04 percent, while the S&P 500 was up 0.16 percent and the Nasdaq advanced 0.8 percent.