Europe's Growth Slows as Deficit Cuts Dent Recovery

[Joanne98]

Source: Bloomberg

Europe’s economic growth weakened in the third quarter from the fastest pace in four years as governments’ austerity measures to cut record budget deficits dented the recovery.

Gross domestic product in the 16-nation euro area rose 0.4 percent from the second quarter, when it increased 1 percent, the European Union’s statistics office in Luxembourg said today. Economists expected a gain of 0.5 percent, the median of 35 estimates in a Bloomberg News survey showed. Industrial output fell 0.9 percent in September from the previous month, the largest drop in 18 months, separate data showed.

Europe’s economic expansion is cooling as leaders grapple with how to handle the sovereign-debt crisis, which has pushed Irish bond yields to records and weakened the euro on concern the EU may need to step in. Ireland and Greece have failed to restore economic growth as they contend with bloated deficits and soaring borrowing costs, while Germany’s expansion slowed from the record pace in the second quarter.

“The squeeze from fiscal consolidation programs on the periphery will build,” said Ken Wattret, chief euro-zone economist at BNP Paribas in London. “That contrast between Germany driven by strong demand for its exports and the periphery really struggling is going to become more rather than less pronounced.”



Read more: http://www.bloomberg.com/news/2010-11-12/europe-s-economic-growth-slows-as-peripheral-countries-lag-behind-germany.html

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We're soon to follow. Austerity HURTS the economy DUH!

[HereSince1628]

1. Austerity programs lead to austerity, who'd a thunk that? n/t

[bhikkhu]

2. Excellent. .4 percent growth is twice as healthy as 1 percent growth.

And 3 percent growth - which is often the goal of blind megalomaniacs in power - is practically the definition of economic disaster itself. The planet is quite finite, of course.

[Igel]

3. We already followed.

Which is the problem with the post-hoc analysis. Our growth rate pretty much tracked, quarter by quarter, the Europeans'.

In our case, it wasn't "austerity" but simply having the megabillions of the stimulus start to run out. It's unclear to me if the economic models actually predicted the drop-off given the drop-off of the stimulus. Since it surprised economists, I suspect a mismatch.

Some of the post-hockery is unconscionable and presents the findings not just in as simple a way as possible but in a way far simpler than possible. The analysis is simple, not as in "not complex" but as in "simple-minded." Greece, for example, experienced an uptick in August's unemployment rate. It was billed as resulting from austerity measures legislated in July but which hadn't taken effect yet--calling that which isn't as though it were. But the analysis is what we already believed, so we can ignore the mismatch between belief and reality when it comes to confirming our beliefs. It's the scientific thing to do.

:think:

Most of the analysis shows very, very short-term thinking. Even as we say that short-term thinking is bad we luxuriate in its excesses and mood-swings. Silly primates.

[StarsInHerHair]

4. austerity makes you poorer

it's obvious; so when is the EU going to reverse their austerity cuts? What would it take for them to do so?

[bhikkhu]

5. Evidently its not obvious to the Europeans

The fools!