German Confidence Is Set Back Very Little By Greek Tragedy

GFK’s confidence measure for Germany edged lower in June as the ongoing Greek situation took a small toll on German optimism. Gfk’s consumer confidence figure for June slipped to 3.5, a decrease on May's revised 3.7, marking the end of the index's short 2-month up-streak. According to the report, the key concern among German consumers is that Greek rescue packages and the weakening euro could hamper the German economy in its recovery.

The survey details recorded GFK’s fourth consecutive decline in the propensity to buy index, and reversed half of prior month's gains in the future salary expectations index. That index had recorded the highest value since 2001 just last month.

Despite consumer concerns, German companies have not been affected nor have they changed their business plans because of the possibility of government debt increases resulting from Germany's leadership of bailouts. Instead, German firms have actually benefited in export competitiveness from a declining Euro; the macroeconomic impact on the German budget has not been an issue.

Ironically the index and its supporting survey information suggests that the net impact of Germany’s participation in the bailout could be to get fiscally worried conservative German consumers to cutback more on spending that already is weak while German firms pursue a bonanza of opportunity abroad due to the euro’s weakening and their improved competitiveness.