Euro-Area Economy Contracted 0.1% in Second Quarter

Economies in Germany and France grew slightly in the Second Quarter. The economy, as a whole in the EU, contracted just 0.1%. These are indications that the recession may be ending in Europe, with some countries returning to growth sooner than others.

The euro region’s economy barely contracted in the second quarter as Germany and France unexpectedly returned to growth, suggesting Europe’s worst recession since World War II is coming to an end...

In Germany, Europe’s largest economy, second-quarter GDP rose a seasonally adjusted 0.3 percent from the first quarter, when it dropped 3.5 percent. The French economy also expanded 0.3 percent in the latest quarter.

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Euro-Area Economy Contracted 0.1% in Second Quarter (Update2) - Bloomberg.com

The complete details can be found at: http://europa.eu/rapid/pressReleasesAction.do?reference=STAT/09/117&format=PDF&aged=0&language

I hear American conservative economic commentators heads are exploding on CNBC and Fox Business News..

And considering the numbers include the horrible Spanish economy, then it aint bad at all.. not at all. When the road sign commercials start to fill out down here then we will know that the recession is over

PeteEU said:

I hear American conservative economic commentators heads are exploding on CNBC and Fox Business News..

And considering the numbers include the horrible Spanish economy, then it aint bad at all.. not at all. When the road sign commercials start to fill out down here then we will know that the recession is over

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PeteEU,

The frequent cheerleading one hears that the U.S. has the "most resilient" or "most competitive" economy on some of the TV commentary is just that, cheerleading. To be sure, the U.S. economy has important strengths (innovation, adaptability, creativity, reasonably flexible labor force), but there are also some important drawbacks (disproportionate reliance on consumption, large role played by credit, uncompetitive cost structures in some manufacturing sectors, and a structural fiscal situation that will worsen over time barring fundamental reforms, etc.).

I suspect that the large role played by consumption/credit and their interrelationship will, over time readjust the role played by finance, and will constitute a weakness when it comes to the timing and magnitude of GDP growth this time around. Today's drop in core retail sales and a lack of robust rebound in consumption to date highlight this potential weakness. In this recession, an economy that is more balanced e.g., relies less on consumption and more on gross private domestic investment and trade, and/or one that didn't have a massive housing bubble, etc., will probably bounce back earlier.

Germany is one such economy and the flash GDP figures confirm earlier anecdotal evidence from increasing manufacturing activity and exports. Of course, there will be a wide variance in the performance of the Euro area economies, but should France and Germany return to sustained growth, that development could give a lift to other European economies, including Spain's. Needless to say, there remains a risk of additional economic shocks that could undermine or interrupt any recovery.

donsutherland1 said:

PeteEU,

The frequent cheerleading one hears that the U.S. has the "most resilient" or "most competitive" economy on some of the TV commentary is just that, cheerleading.

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Naw ya think? Was my point about their heads blowing up yet again after another failed "talking point" .. still not heard any explanation on CNBC.. heck barely a comment.. funny they are quick to jab Europe when the numbers are bad..

To be sure, the U.S. economy has important strengths (innovation, adaptability, creativity, reasonably flexible labor force), but there are also some important drawbacks (disproportionate reliance on consumption, large role played by credit, uncompetitive cost structures in some manufacturing sectors, and a structural fiscal situation that will worsen over time barring fundamental reforms, etc.).

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And you just used some of the same failed "cheerleading" commentary in that. I agree the US has a more flexible labour force and adaptability up to a point. However on innovation and creativity.. I disagree totally. There is simply no data on this to substantiate such a claim.

As for the drawbacks I agree on the disproportionate reliance on consumption and credit but that is what the US is all about. Problem here was lack of transparency, accountability and regulation. I only agree some what on the uncompetitive cost structures.. real depends on what cost. As for your structural fiscal situation, that has more to do with lack of regulation, accountability and transparency in the US economy as I already mentioned. Big business simple gets too much of a "free ride" to do whatever they want, weather it is inventing risky assets that take down the US economy or allow sub-prime mortgage bonanza to go on without any consequences or a simple thing like being able to steal the pensions of its employees.

Today's drop in core retail sales and a lack of robust rebound in consumption to date highlight this potential weakness. In this recession, an economy that is more balanced e.g., relies less on consumption and more on gross private domestic investment and trade, and/or one that didn't have a massive housing bubble, etc., will probably bounce back earlier.

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Well the talking heads are blaming "cash for clunkers" for the fall in retail sales...:roll:

Germany is one such economy and the flash GDP figures confirm earlier anecdotal evidence from increasing manufacturing activity and exports. Of course, there will be a wide variance in the performance of the Euro area economies, but should France and Germany return to sustained growth, that development could give a lift to other European economies, including Spain's. Needless to say, there remains a risk of additional economic shocks that could undermine or interrupt any recovery.

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Sure there is a risk. There is always a risk. If the US does not dig it self out its hole then the whole worlds economy is at risk. But like it or not, and I know the talking heads over there dont like it, the Euro Zone has fared far better than the UK and US in this recession.. at least so far. Our unemployment rate has not "shot" up (minus Spain) as in the US and UK for one. Some economies barely went into recession and sustained low unemployment. Heck France was one of the last countries to officially enter recession in the industrialized world... if not the last one.

I personally believe that one of the reasons that this crisis has not hurt the Euro zone as bad as the US and UK, has been due to our far far higher savings rate, and our social system. The social system and unemployment system "softened the blow" so to say.. while consumption has fallen (cause it always does in a crisis.. its part of our nature) it has not "crashed" like in the US due to lack of money among people.

Tomorrow I believe we get new numbers for Spain, they economy in Europe that after the UK has been hit hardest. If there is another "positive" number from Spain of some kind then .. well. For example Spain has seen positive (slight) job growth for 3 months now. .. granted the unemployment rate is still nutso high but the economy is adding new jobs, something that still has not happened in the US.

But yea, it can go south still, both here and in the US and everywhere.

PeteEU said:

I hear American conservative economic commentators heads are exploding on CNBC and Fox Business News..

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And what exactly is it that you think this shows where heads should explode?

Small add..

Lets not forget this can still be revised down in a few months

Harshaw said:

And what exactly is it that you think this shows where heads should explode?

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Because for the last many months these same talking heads have been claiming that it was worse in Europe than in the US...

kinda does not fit in their small narrow-minded world does it now..

:roll:

I think your anti-American zeal causes to you reach juuuust a little bit.

PeteEU said:

Because for the last many months these same talking heads have been claiming that it was worse in Europe than in the US...

kinda does not fit in their small narrow-minded world does it now..

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Why is EVERYTHING always a EU vs. U.S. thing with you?

Can we not just be happy about our respective areas of the world without having to drag in some snarky comment about it?

Harry Guerrilla said:

Why is EVERYTHING always a EU vs. U.S. thing with you?

Can we not just be happy about our respective areas of the world without having to drag in some snarky comment about it?

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LOL that is some change of tone....

I gotta hand to ya'll. You're definitely making lemonade out of lemons.

PeteEU said:

And you just used some of the same failed "cheerleading" commentary in that. I agree the US has a more flexible labour force and adaptability up to a point. However on innovation and creativity.. I disagree totally. There is simply no data on this to substantiate such a claim.

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To be clear, I didn't state that the U.S. was more innovative than any country per se, just that one of its attributes is that it is innovative. While no precise measures of innovation exist, some anecdotal evidence can be found in patents, growth/life-cycle/structural changes in young industries, emergence/growth in new industry subsectors, papers containing new scientific discoveries/knowledge, etc.

Of course, in each case, there are limitations. Not every patent is equal so to speak. Some patents, usually business process ones, can be worth very little e.g., they may be little more than an attempt to lock up a mathematical trading formula, which is subject to huge limitations itself.

donsutherland1 said:

To be clear, I didn't state that the U.S. was more innovative than any country per se, just that one of its attributes is that it is innovative. While no precise measures of innovation exist, some anecdotal evidence can be found in patents, growth/life-cycle/structural changes in young industries, emergence/growth in new industry subsectors, papers containing new scientific discoveries/knowledge, etc.

Of course, in each case, there are limitations. Not every patent is equal so to speak. Some patents, usually business process ones, can be worth very little e.g., they may be little more than an attempt to lock up a mathematical trading formula, which is subject to huge limitations itself.

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Using patents is highly limited. For one, patents tend to be taken out in the country where the potential for most profit is and that has been the US for many decades. Another problem in using patent statistics is that it often does not state country of origin. For example I can take out a patent in the US but I am not American am I now... but it will count as an "American" patent. And if you go look at patents per captia, one of the methods to compare, then the US is not on top.. that is usually the Asian countries.

As for anecdotal evidence you speak off.. sorry but that does not fly either. While I can some what agree that the US has had a nack to exploit new technologies, it is not the home of invention as many American's tend to believe. And that "exploit" of new technologies often is due to its huge market, which still is one of the 2 biggest in the world and was for 50 years the absolute biggest by a wide margin and that tends to pull in people from all over the world with good ideas to make a buck so to say. It does not mean that it was the US that "invented" the product, but it does mean it was there that the product got its chance so to say.. big difference.. one is innovation and the other is market exploitation.

PeteEU said:

Using patents is highly limited. For one, patents tend to be taken out in the country where the potential for most profit is and that has been the US for many decades. Another problem in using patent statistics is that it often does not state country of origin. For example I can take out a patent in the US but I am not American am I now... but it will count as an "American" patent. And if you go look at patents per captia, one of the methods to compare, then the US is not on top.. that is usually the Asian countries.

As for anecdotal evidence you speak off.. sorry but that does not fly either. While I can some what agree that the US has had a nack to exploit new technologies, it is not the home of invention as many American's tend to believe. And that "exploit" of new technologies often is due to its huge market, which still is one of the 2 biggest in the world and was for 50 years the absolute biggest by a wide margin and that tends to pull in people from all over the world with good ideas to make a buck so to say. It does not mean that it was the US that "invented" the product, but it does mean it was there that the product got its chance so to say.. big difference.. one is innovation and the other is market exploitation.

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Please prove everything you just said.

American said:

Please prove everything you just said.

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So I have to prove the earth is round too? Open your eyes for god sake.

PeteEU said:

So I have to prove the earth is round too? Open your eyes for god sake.

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Did you say the earth was round, sorry I missed that. You can omit that one.

PeteEU said:

Using patents is highly limited. For one, patents tend to be taken out in the country where the potential for most profit is and that has been the US for many decades.

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I don't disagree on this point.

Another problem in using patent statistics is that it often does not state country of origin.

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The U.S. patents database lists the inventor(s) and their countries. One example (relevant section, only):

And if you go look at patents per captia, one of the methods to compare, then the US is not on top.. that is usually the Asian countries.

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My statement is far more limited than that. I made no claim that the U.S. is more innovative than any specific country.

While I can some what agree that the US has had a nack to exploit new technologies, it is not the home of invention as many American's tend to believe.

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I didn't make such a claim either.

It should also be noted that most "inventions" that are patented are really improvements on older technologies or add-ons to such technologies. Revolutionary breakthroughs are scarce.

In addition, a growing number of inventions have been developed by people from more than one country. International collaboration has been increasing.

And that "exploit" of new technologies often is due to its huge market, which still is one of the 2 biggest in the world and was for 50 years the absolute biggest by a wide margin and that tends to pull in people from all over the world with good ideas to make a buck so to say. It does not mean that it was the US that "invented" the product, but it does mean it was there that the product got its chance so to say.. big difference.. one is innovation and the other is market exploitation.

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Having a large market is an important advantage. The U.S., European Union, and increasingly China in coming years, will all be able to leverage their large markets. With the rapid rise in the number of high-skilled, highly-educated graduates in China and its rapidly expanding market, I would not be surprised if China becomes a leader in innovation and improvement over time.

donsutherland1 said:

I don't disagree on this point.



The U.S. patents database lists the inventor(s) and their countries. One example (relevant section, only):

My statement is far more limited than that. I made no claim that the U.S. is more innovative than any specific country.



I didn't make such a claim either.

It should also be noted that most "inventions" that are patented are really improvements on older technologies or add-ons to such technologies. Revolutionary breakthroughs are scarce.

In addition, a growing number of inventions have been developed by people from more than one country. International collaboration has been increasing.



Having a large market is an important advantage. The U.S., European Union, and increasingly China in coming years, will all be able to leverage their large markets. With the rapid rise in the number of high-skilled, highly-educated graduates in China and its rapidly expanding market, I would not be surprised if China becomes a leader in innovation and improvement over time.

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Agree on all. Very well formulated. As for the US patent system showing country of origin, it does not per say change the statistic, as it is still taken out in the US.. the biggest market