Signs point that the Eurozone economy is already in recession, but no one has called it yet.
Instead, headlines read like this: German Economy Almost Stalled in Q2
The German economy, Europe’s largest, almost stalled in the second quarter as the region’s sovereign-debt crisis weighed on confidence.
Gross domestic product, adjusted for seasonal effects, rose 0.1 percent from the first quarter, when it jumped a revised 1.3 percent [down from 1.5%], the Federal Statistics Office in Wiesbaden said today. Economists had forecast growth of 0.5 percent, according to the median of 33 estimates in a Bloomberg News survey.
France said last week its economy stagnated in the three months through June, while reports on Aug. 5 showed Italy’s GDP rose 0.3 percent and Spain’s increased 0.2 percent. Austria’s economy grew 1 percent. The German statistics office revised first-quarter growth down from an initially reported 1.5 percent.
Europe’s malaise is further confirmation of a cooling global economy. Japan cut its annual growth forecast last week on weaker export prospects, Hong Kong’s economy unexpectedly shrank in the second quarter and China’s expansion slowed. In the U.S., Federal Reserve Chairman Ben S. Bernanke signaled he may expand record monetary stimulus to revive a faltering recovery and reduce unemployment stuck around 9 percent.
Things have deteriorated must faster than anyone thought could happen. Moreover, as I have noted many times previously, austerity measures in Italy, Spain, Greece, Ireland, Portugal, and France cannot help, at least in the short-to-intermediate term. It may take years for Italy, Spain, etc productivity measures take hold. Germany does not have austerity measures, yet it is on the verge of contraction anyway.
Mike “Mish” Shedlock
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