Survey: Eurozone economy exceeding expectations... by maybe shrinking at a slower rate

Well… it’s a sad after sixth straight months of economic contraction, I suppose a seventh quarter of slightly less of a contraction is something of a relative improvement — “relative” being the key word. Via the WSJ:

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The euro-zone economy may finally be exiting its longest postwar recession but entering a period of stagnation or very weak growth at best, latest data suggest. …

In the PMI survey, which data company Markit compiles based on reports by purchasing managers at around 5,000 companies, scores below 50 signal falling business activity. Even June’s improved reading thus points to a slight drop in euro-zone gross domestic product in the second quarter. But the pace of contraction is fading. Euro-zone GDP fell 0.9% in the first quarter, at an annualized rate, its sixth straight drop. …

“We’re in the first stage of a fizzling out of the recession,” with recovery in Germany “trickling down” to France, Italy and Spain, said Andreas Rees, economist at UniCredit in Frankfurt.

But after 18 months or more of steady contraction, whether the bloc’s GDP flattens or even expands a little bit is largely irrelevant for households and businesses, analysts warn: It will still feel like a recession, they say.

Precisely. First of all, I have little-to-zero faith in so-called expert euro-analysts with projections of optimism these days, given how often their ambitious predictions been “unexpectedly” proven spectacularly incorrect; but secondly and more importantly, even if the eurozone economy somehow manages to stop shrinking, a zero or one percent growth rate is going to accomplish approximately nothing in helping Europe to solve their massive employment problems, grow their wealth, increase their tax receipts, and pay off their gigantic debts.

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The eurozone’s collective unemployment rate currently stands at above 12 percent — a record high since the formation of the currency union — and it’s widely ‘expected’ to keep on rising at least throughout the year, which in turn is going to push up the public spending in the union’s multiple and expansive entitlement states. It’s a self-defeating and vicious cycle, and it is most definitely not what substantive economic recovery looks like.

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Beege Welborn 5:00 PM | December 24, 2024
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