The 18-nation euro-zone is the largest economy in the world, eclipsing that of the U. S. The euro-zone is the largest trading partner of the U. S. (the largest importer of U. S. goods, the largest exporter of goods to the U. S.). The euro-zone is in an economic crisis. Its recovery from the 2008 global financial collapse has been as anemic as that of the U. S., in fact more so. The euro-zone already slid back into recession once. And its economy was barely positive in the first quarter of this year, growing only 0.2%. It slowed further to 0.0% quarter-over-quarter in the second quarter.
Worse, Germany, the euro-zone’s largest and previously strongest economy, unexpectedly saw its economy contract to negative -0.2% in the second quarter. France, the second largest euro-zone economy, saw its growth slow to 0.0% for the quarter. Italy, Europe’s fourth largest economy, slid back into recession, its GDP at negative 0.8% in the second quarter, its second straight quarterly contraction.
Reports this week indicate the problems are worsening in the third quarter.
Retail sales in Germany plunged 1.4% in July, after declining 0.4% in the second quarter.
Germany’s Ifo business confidence index fell in August for the fourth straight month, to its lowest level since July 2013. Market research group GfK reported its German consumer expectations index ‘collapsed’ in August to its most pessimistic level since 1980. Perhaps for good reason, since the overall euro-zone’s unemployment rate remained in double-digits at 11.5% in July, just 0.5% lower than its peak of 12% in 2013.
This post was published at FinancialSense on 08/29/2014.