Seven Strikes And You’re Out?

Seven quarters in a row and still no hint of growth in Spain’s GDP. The quarter to quarter drops are diminishing and the year-over-year drop is lessening but the dropping continues.

On a day that Greece is getting assistance because its own people won’t pay taxes to service the payments on debt for their own bills, it must be a bitter day for Spain. Spain’s construction sector blew up in the financial crisis and has taken the economy down along with it. Spain accounts for the bulk of European unemployment. Because its problem is real estate it will not be fixed soon. Its real estate woes cannot be exported. Spain has a long hard road ahead.

 But economists like to look at growth rates and the growth rates in the chart are turning higher. Yes, they are still negative but they are headed higher. Spain has been making progress but not enough to translate into positive growth.

Household consumption has been faltering (we do not have the Q4 reading on this yet). Much of turn has been at the hand of government spending- that’s spending when other sectors won’t. Both exports and imports are rebounding- exports a bit faster.

At this point Spain is still trying just to hold it together. It will still take sometime to know what its recovery is made of. It has yet to cross into that space. Spain remains a euro-laggard.