Economic growth in Germany revised upward

 

Good morning everyone!

Yesterday the Germans announced that they were revising their economic growth forecasts for 2010 upward from 1.4% to 3.4%.

Analysis: This is very substantive news for the worldwide economic recovery.

First of all, Germany is one of the world’s largest economies. So a more than doubling of its forecast is an additional $billions in growth.
Second, the German economy is largely export driven. For growth forecasts to have boosted this much must mean that the rest of the world is more in a buying mood than before.

Third, for a more than doubling increase in the current year forecast to have been announced this late in 2010 means two things:

  • The Germans are clearly confident that the ultimate tally is pretty much “in the bank;” and…
  • That the Germans clearly had a screamingly good third quarter. Think about it, if entering the third quarter your estimate were 1.4% growth and exiting that same quarter you more than double your estimates, something good must have happened.

Fourth, many investment pundits have been panicky about Europe ever since it was revealed that the Greeks lie about their finances and can’t live within their governmental means. The theory was that Greece’s problems would spread like wildfire and take out Italy, Portugal and Spain. Then all of Europe would fall, then the WORLD!!!!! The sky is falling, the sky…didn’t. Not only did Germany step into the middle of the European debt crisis and say, “the euro stops here,” they did so when their economic forecasts were much worse. Their move back in May calmed overly caffeinated investors. Now growth is better. So fears of a European debt crisis MUST be taken off of the table.

In conclusion, there must have been a “tipping point” for the world’s economy in the third quarter, as represented by German economic growth.

One of the scions of the investment firm I used to work for used to say, “You make most of your money in a downturn, you just don’t know it until later.” Have you been investing?

Importance grade: 9; yesterday’s news is very important, but the most important data remains the U.S. unemployment rate.

I hope that each of you has an excellent weekend!

Jason
Author of The Intuitive Investor: A Radical Guide for Manifesting Wealth


Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.


HomeAboutBlogConsultingSpeakingPublicationsMediaConnect

RSS
Follow by Email
Facebook
LinkedIn