Can Europe power the recovery as US and China stumble?

A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here.

The United States and China have each taken turns powering the global economic recovery from the pandemic. Is Europe next?

The European economy rebounded more strongly than expected after lockdown restrictions were eased earlier this year. And it has avoided some of the big risks now clouding the outlook for the United States and China.

S&P Global Ratings upgraded its 2021 European growth forecast last week to 5.1% from 4.4%, citing rapid improvements in economic output, the labor market and high levels of corporate investment.?

The Organization for Economic Cooperation and Development has a similar view. It said last week that it expects the eurozone economy to expand 5.3% this year, an upgrade of 1 percentage point from its May projection.

The CF Industries Holdings Inc. fertilizer manufacturing complex, which is being forced to be shut down due to high natural gas prices, in Ince, U.K., on Thursday, Sept. 16, 2021. Europe's energy crunch has forced the major fertilizer maker to shut down two U.K. plants, with no estimate for when production will resume.

Related article Europe is paying record prices for energy. A winter crisis looms

Big picture: S&P now expects Europe to return to its pre-crisis level of GDP before the end of this year, one quarter earlier than previously forecast.

The economic upswing has been bolstered by the European Union’s vaccine campaign, which got off to a slow start but is now one of the world’s most successful. More than 72% of EU adults over the age of 18 have been fully vaccinated, according to official data, compared to 66% of Americans over 18.

The emergency response to the coronavirus has also played a major role. The European Central Bank responded to the crisis with a major bond-buying program, and governments rolled out programs to ensure workers were paid.

More to come: European consumers amassed more than €300 billion ($350 billion) in excess cash reserves during the pandemic, according to S&P, and they’re starting to spend, helping to fuel a continued rebound in services.?

At the same time, EU countries are starting to receive huge grants and cheap loans from the bloc’s €800 billion ($940 billion) recovery fund. The stimulus is likely to add 3.9% to eurozone GDP by 2026, according to S&P.

Status check: The United States and China face significant headwinds.

The vaccine rollout has sputtered in America, where the percentage of people who have received at least one dose is the lowest in the G7. The OECD downgraded its 2021 US forecast last week by 0.9 percentage points to 6%.

China’s economy will grow 8.5% this year, according to the OECD. But growth may have stalled in August, according to survey data, as officials tried to stamp out new coronavirus outbreaks. A sweeping regulatory crackdown on private business could further drag on activity, and the country is bracing for the potential collapse of Evergrande.?

The fate of the massive property developer remains up in the air after a deadline came and went last week without an update from the company on whether it plans to pay nearly $84 million interest owed to bondholders.

Why it matters: Evergrande has about $300 billion in total liabilities, and some analysts fear a disorderly collapse could spark China’s “Lehman Bros” moment by sending shocks through the financial system and economy. Real estate and related industries account for about 30% of Chinese GDP.

Can Europe pick up the slack if needed? That remains to be seen.

Germany’s Ifo Business Climate Index declined in September, suggesting the recovery is losing steam in Europe’s biggest economy. IHS Markit said that eurozone business activity “grew at a markedly reduced rate” during the month, reflecting supply chain bottlenecks and concerns over the pandemic.

It’s possible that the United States, China and Europe will all struggle through the rest of the year, presenting policymakers with a difficult set of decisions as inflation continues to remain elevated.?

“The most likely outcome is that the global recovery continues, albeit at a slower pace, that inflation peaks in the coming quarters before dropping back next year, and that central banks dial back policy support in a gradual and well-signalled manner,” Neil Shearing of Capital Economics wrote recently.

Marc Benioff wants to talk about Facebook

From the climate crisis to Covid, Marc Benioff sees a common thread for what ails America today: deception that is allowed to spread like wildfire on Facebook (FB).

“This digital revolution really kind of has the world in its grip. And in that grip, you can see the amount of mistrust and misinformation that is happening,” Benioff told my CNN Business colleague Matt Egan.

The Salesforce (CRM) CEO and owner of Time Magazine warned these lies tricking social media users are making it harder to solve society’s biggest problems.

“Look at how it is affecting the world. You can talk about the political process. You can talk about climate. You can talk about the pandemic,” Benioff said. “In each and every major topic, it gets connected back to the mistrust that is happening and especially the amount of it being seeded by the social networks. It must stop now.”

The tech billionaire called for Congress to crack down on Facebook’s disinformation problem.

“I own Time and I am held accountable for what is produced on my platform,” Benioff said, adding that CNN and other media outlets are also held accountable. “In regards to Facebook, they are not held accountable. So they do not have an incentive from the government. That has to change.”

Up next

Tuesday: US consumer confidence; Micron earnings

Wednesday: EIA crude oil inventories, Evergrande bond payment due

Thursday: US unemployment claims; CarMax earnings; China PMI

Friday: US personal income and inflation data; Eurozone inflation