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Economy in Brief
Philadelphia Fed Factory Conditions Improve; Prices Jump
The Philadelphia Fed reported that its General Factory Sector Business Conditions Index rose to 23.2 during April...
U.S. Initial Claims for Unemployment Insurance Are Little Changed
Initial unemployment insurance claims slipped to 232,000 (-6.1% y/y) during the week ended April 14...
U.K. Retail Sales Fall
U.K. GDP is expected to cool its jets when the first quarter GDP number is released...
U.S. Mortgage Loan Applications Rebound; Interest Rates Steady
The MBA total Mortgage Applications Volume Index increased 4.9% last week (1.0% y/y), ...
Japan’s Trade Surplus Returns Even As Trade Flows Slow
While the IMF has just lifted its outlook for growth in 2018, Japan is logging weaker and weaker export and import growth as the year progresses...
by Robert Brusca November 13, 2009
European GDP turned higher in Q3 but the results were
generally less than expected. Among the early ‘flash’ GDP reporters
France posted a small rise but it was the second rise in a row for
France. Greece with always volatile results posted the strongest rise
followed by Austria. Italy and The Netherlands have the largest Yr/Yr
declines in this group; the EMU Yr/Yr drop is of 4.1%. Greece is lower
Yr/Yr by just 1.6% Austria but just 2.2%. Germany the largest e-Area
economy is off by 4.8% Yr/Yr even though it has two quarters in a row
of solid growth under its belt.
Flash reports do not provide any GDP detail but the various
authorities do offer some account of their results. Both Germany and
France cited the role of exports in pushing growth ahead. In Germany
investment demand was also described as a key factor.
Paragon of strength or parasite of growth?
-- An unfolding theme in the Area is that exports, external demand, is
driving the European recovery. In France domestic demand was flat in
the quarter despite a ton of ongoing stimulus that has left France
unable to get its fiscal budget gap in line as soon as the EU
Commission wants it to. Hungary, in its GDP release today, complained
that exports were weak and that was sapping GDP strength. The largest
industrial economies would seem to be good candidates to spur world
growth with their own domestic demand instead of relying on the demand
increases elsewhere. Chancellor Merkel has defended Germanys ‘right’ to
be a leading exporters, Japan always seeks a surplus to ‘defend’
against the country’s lack of oil and dependence on oil and other
natural resource imports. China’s trade surplus grew larger last month.
How can ‘everyone’ have export led growth? How can the US (whose
current account deficit surged in November) get its deficit in line if
major competitor countries insist on running trade surpluses, spurring
exports and maintaining weak domestic demand at home? This is something
the G-20 has been completely unable to sort out.
These sorts of structural imbalances helped to lead to the
last financial crisis. Such flows underpinned the 1973-78 oil boom-bust
cycle. Factors that put persistent surpluses sand deficits in play are
dangerous and the G-20 has not plan to sort it out. At the weaker
dollar works to mitigate the US imbalance problem even if it is playing
with fire.
European Growth for Selected Flash GDP Results | ||||||
---|---|---|---|---|---|---|
Q/Q Saar | Yr/Yr | |||||
Q3-09 | Q2-09 | Q1-09 | Q3-09 | Q2-09 | Q1-09 | |
Austria | 14.0% | -3.7% | -13.8% | -2.2% | -5.4% | -4.8% |
France | 1.1% | 1.1% | -5.5% | -2.4% | -2.9% | -3.5% |
Germany | 2.9% | 1.8% | -13.4% | -4.8% | -5.8% | -6.7% |
Greece | 17.6% | 32.7% | -29.8% | -1.6% | -1.2% | -0.5% |
Italy | 2.4% | -1.9% | -10.5% | -4.6% | -5.9% | -6.0% |
Netherlands | 1.7% | -4.0% | -9.4% | -4.0% | -5.1% | -4.2% |
EMU | 1.5% | -0.7% | -9.6% | -4.1% | -4.8% | -4.9% |