The positive Retail Sales report this morning has helped improve sentiment that was earlier showing a mixed picture due to the soft GDP read out of Europe. This morning’s economic readings spotlight the growth divergence between the U. S. and the rest of the developed world, which has been the primary driver of the dollar’s strength recently.
The Euro-zone economy barely stayed in positive territory in Q3, with GDP growth of 0.1% in Germany and 0.3% in France, the top two economies in the region; GDP growth in the third largest economy, Italy, came in the negative (the growth rates are from the preceding quarter, not year over year). Overall growth for the currency block as a whole came in modestly better than expected at 0.2%; GDP growth was 0.1% in Q2 when Germany had slipped into the negative territory.
On a comparable measurement basis, the U. S. economy expanded 0.9% pace in Q3 and 1.1% in Q2. Greece and Spain – two of the countries hardest hit by the Euro-zone’s financial crisis of the last few years – displayed a lot more economic vigor, with GDP growth of 0.7% and 0.5%. But they aren’t big enough to move the needle for the currency bloc’s roughly $12 trillion economy. Please note that the region’s economy still hasn’t reached the pre-crisis size of 2008; it is about 2% below that level.
This post was published at FinancialSense on 11/14/2014.
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