{"id":422,"date":"2010-05-12T08:46:00","date_gmt":"2010-05-12T12:46:00","guid":{"rendered":"http:\/\/www.intuitiveinvestor.com\/web\/?p=422"},"modified":"2018-08-18T17:59:21","modified_gmt":"2018-08-18T21:59:21","slug":"little-gdp-growth-in-eurozone","status":"publish","type":"post","link":"https:\/\/jasonapollovoss.com\/web\/2010\/05\/12\/little-gdp-growth-in-eurozone\/","title":{"rendered":"Little GDP growth in Eurozone"},"content":{"rendered":"

Good morning everyone!<\/span><\/p>\n

First quarter gross domestic product numbers for the eurozone<\/span> are out.\u00a0 By the way, over the last several weeks I have been throwing around the terms European Union and eurozone<\/span> without discussing the difference.\u00a0 The eurozone<\/span> is the collection of nations that all use the euro as their currency.\u00a0 This group is a subset of the bigger European Union which is the big free-trade zone in Europe.\u00a0 Anyhow, first quarter GDP growth was a very, very tepid 0.2%.\u00a0 In other words, a sneeze’s<\/span> worth of growth.\u00a0 This figure compares to 0.0% GDP growth in the fourth quarter.<\/span><\/p>\n

Analysis:<\/strong> The very small growth in the first quarter happens at a time when much of the world is looking to Europe and its economy and economic policies.\u00a0 In the context of the massive bailout announced over the weekend, the GDP growth looks a little scary.\u00a0 This is because austerity measures are going to be implemented in Europe, and unlike the United States, government spending is a bigger portion of the economies of Europe.\u00a0 A decline in government spending would put the eurozone<\/span> back into recession.\u00a0 Additionally, the big debt burden of the bailout monies will begin to generate interest expense that has to be covered in the economy.\u00a0 This is an additional drag on eurozone<\/span> GDP.\u00a0 In short, it doesn’t look good for Europe.<\/span><\/p>\n

Mitigating against the above scenario is the possibility that the debt spending to unfreeze European credit markets will begin to get the economic blood, money, circulating again.\u00a0 Europe is suffering from a credit freeze that has endured longer than in the U.S.\u00a0 Hopefully, the budgetary austerity measures, in conjunction with the spending of bailout monies will result in a credit thaw.\u00a0 The problem is that credit is only useful if it goes to finance projects that are economically beneficial.\u00a0 And let’s just be polite by saying that Europe is not exactly known for its innovative ideas.<\/span><\/p>\n

My feeling is that the world’s financial markets will be mildly enthused that first quarter GDP was positive.\u00a0 But that they will eventually do the above calculus that I did and realize that it’s looking a little tenuous across the Atlantic.<\/span><\/p>\n

Importance grade:<\/strong> 8; while it’s nice that the eurozone<\/span> showed economic growth, the amount was basically a statistical error.\u00a0 What’s more, the policy choices of the eurozone<\/span> finance ministers are narrowing, not widening,\u00a0because of the bailout.\u00a0 It is unclear just what Europe can do to get out of recession at this juncture other than to just sweat it out.\u00a0 On balance, I think that this news will be interpreted as being negative, not positive.<\/span><\/p>\n

[Shout out to European governments: Take<\/span> this opportunity to make it easier to start a business in Europe.\u00a0 Take the opportunity to diminish the power of labor unions.\u00a0 Both of these two things hamper economic growth there.]<\/span><\/p>\n

Jason<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Good morning everyone! First quarter gross domestic product numbers for the eurozone are out.\u00a0 By the way, over the last several weeks I have been throwing around the terms European Union and eurozone without discussing the difference.\u00a0 The eurozone is the collection of nations that all use the euro as their currency.\u00a0 This group is […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-422","post","type-post","status-publish","format-standard","hentry","category-the-blog"],"_links":{"self":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/422","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/comments?post=422"}],"version-history":[{"count":0,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/422\/revisions"}],"wp:attachment":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/media?parent=422"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/categories?post=422"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/tags?post=422"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}