The ongoing eurozone recovery

by on June 5, 2017 at 6:41 am in Current Affairs, Economics | Permalink

Despite the 2015 Greek crisis, total growth in the single currency area has exceeded that in the US for the past two-and-a-half years, with the eurozone expanding 5.1 per cent over the period compared with 4.6 per cent for the US.

An even more encouraging sign, according to Mr Praet, is the broad-based nature of the eurozone’s revival, which suggests a more robust recovery. Italy’s economy grew 0.4 per cent in the first quarter, while Portugal’s GDP jumped 1 per cent.

And this (don’t get too carried away with that Phillips curve!):

Economists say the fall in May’s inflation rate to 1.4 per cent, from 1.9 per cent in April, removed any immediate pressure on the ECB to act.

That is all from Chris Giles and Claire Jones at the FT.  And as I’ve said before, this is a major reason why market volatility has stayed so low.

1 prior_test2 June 5, 2017 at 6:53 am

But eurogeddon is coming – bet on it.

Just don’t set a date.

2 Milo Fan June 5, 2017 at 9:56 am

It wasn’t 2008?

3 Dick the Butcher June 5, 2017 at 7:36 am

Central banks hold a third of the world’s marketable bonds, $18 trillion of $54 trillion. Can the amount of debt be sold without crashing the bond market?

4 rayward June 5, 2017 at 7:51 am

Markets are stable until they aren’t; and market imbalances are a signal of instability to come. Shifting such an enormous volume of global output to a place, China, with such a high savings rate is unsustainable (Cowen’s least favorite word). Sure, in the short run there’s an illusion of stability, as all those savings in one place find their way to markets in other places and help keep asset prices stable. But the imbalance contributes to low or no wage growth in those other places and a low r which induces greater risk taking and an increase in volatility. What’s hoped for is manageable volatility, not volatility triggered by a crisis (financial, political, etc.) and is uncontrollable. Notice that Cowen is observing past stability not predicting future stability.

5 Judith June 5, 2017 at 8:25 am

L’Europe est constituée de vieux pays qui ont été pour beaucoup des colonisateurs, mais aujourd’hui, à part l’Angleterre (UK) il n’y a plus de “ressources en énergie” pouvant alimenter l’Europe et les ressources extérieures sont inexistantes.

6 napolean dantes June 5, 2017 at 8:12 pm

consileragre Edmond dates reads many stories of Antigone and alimony payments are ressaurance of existence on other planets.

7 chuck martel June 5, 2017 at 8:34 am

Italy’s economy grew 0.4 percent, not 0.3 percent or 0.5 percent. This was evidently across all sectors, from olive oil production to fashions to movies to automobiles. It’s important to have a true grasp of what’s going on in any particular economy.

8 A Black Man June 5, 2017 at 11:12 am

This absurd. The olive oil sector grew at 0.445 percent, which means it round up to 0.45, which round to 0.5.

9 8 June 5, 2017 at 11:27 pm

Italy expanded at 1 percent! A miracle!

10 lbc June 5, 2017 at 8:43 am

ugh !!!??? not only is this untrue (about Germany and the poorest parts of the US) but also, Scandinavian countries (which are richer than Germany) have a MUCH HIGHER standard of living than America (and not just the poorest parts of it…)

11 Just Another MR Commentor June 5, 2017 at 9:49 am

Sorry, you should check out some stats. GDP per capita is lower in Germany than Mississippi.

12 JWatts June 5, 2017 at 10:30 am

“…Scandinavian countries … have a MUCH HIGHER standard of living than America ”

That’s an interesting claim. What evidence do you base it on?

13 CM June 5, 2017 at 1:02 pm

Not sure what lbc is thinking but most people who make this type of argument rely on on HDI related measures of standard of living. For so-called simple HDI (unadjusted for inequality), Germany and (some) Nordics outperform the US.

https://simple.wikipedia.org/wiki/List_of_countries_by_Human_Development_Index

For Inequality adjusted HDI, Germany and all of the Nordics outperform the US.

https://en.wikipedia.org/wiki/List_of_countries_by_inequality-adjusted_HDI

I am not sure if these measures are superior to per capita GDP or per capita GNP but they are what people usually point to when they argue that the US has lower living standards than some European countries.

14 Jay June 5, 2017 at 2:15 pm

In other words people point to the statistic that makes their point. “standard of living” is ambiguous (wages, average home size, # of TV’s in the home, per Cap GDP, etc), though Ibc said “MUCH HIGHER” which is hard to believe using any measure.

15 JWatts June 5, 2017 at 2:38 pm

By the HDI index, the US and Germany are nearly identical. US 0.915 & Germany 0.916.

Sweden is actually lower than the US 0.907 with Denmark being the very highest on the list at 0.944.

None of that substantiates the claim that: “Scandinavian countries … have a MUCH HIGHER standard of living than America “

16 Just Another MR Commentor June 5, 2017 at 3:23 pm

Not to mention that the HDI index is highly biased in that it overrates European standards of living but underrates American.

17 Butler T. Reynolds June 6, 2017 at 8:30 am

I like how people can pick a single European country to compare to all of the US.

18 lbc June 5, 2017 at 8:44 am

my comment was in response to a comment from “another MR reader” which got deleted. sorry for the confusion.

19 meets June 5, 2017 at 10:53 am

Huh.

We need to revisit all the claims about austerity and Germany playing not nice.

20 Bill June 5, 2017 at 1:13 pm

Did you look at the unemployment rate in the Eurozone countries?

This is from EU Statistics: “The euro area seasonally-adjusted unemployment rate was 9.3 % in April 2017, down from 9.4 % in March 2017 and down from 10.2% in April 2016. The EU-28 unemployment rate was 7.8 % in April 2017, down from 7.9 % in March 2017 and from 8.7 % in April 2016.” http://ec.europa.eu/eurostat/statistics-explained/index.php/Unemployment_statistics

Anytime you see “growth” you have to ask from what base, and what is being ignored.

21 8 June 5, 2017 at 11:33 pm

But if GDP contracts 5% in a recession, Europe loses 3 years of growth. And then the revisions come and you find out 5 years of growth are gone.

The U.S. is only nominally better because it has more immigration. Whether it is really better, who knows? At least Maximum Overdrive is still a movie there instead of reality.

22 Juegos Friv June 6, 2017 at 6:05 am

Scandinavian countries … have a MUCH HIGHER standard of living than America… That’s true.

23 Sam Haysom June 6, 2017 at 6:09 am

… nope …

24 Ricky Tylor June 6, 2017 at 5:28 pm

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