EmailSurprise. Europe is not in recession. At least not yet.
The Eurozone economy of the 17 countries using the euro posted aggregate 0.0% growth in the first quarter of 2012 compared to the fourth quarter of 2011. Germany posted 0.5% growth (which translates to 2.0% growth in the annualized manner that the US reports GDP data), France was flat, Spain -0.3%, and Italy -0.8%.
For the record, Ireland, Greece, Cyprus, the Netherlands, Portugal, and Slovenia also had negative growth. The larger European Union of 27 countries, which includes ten countries not using the euro, also came in at 0.0% growth.
Eurozone and EU growth had been -0.3% in the fourth quarter, so the fact that the first quarter was not negative means that neither fits the technical definition a recession being two consecutive quarters of a decline. Whew, that's a relief!
In essence, Germany once again bailed out everyone else.
The euro is up slightly against the dollar, European stock exchanges are fractionally higher, and S&P futures suggest a bounce of perhaps 8 points at the open.
US retail sales in April rose 0.1%. April CPI was unchanged while the core rate was up 0.2%. Lower gas prices held down the total change. The Empire State manufacturing survey came in at 17.1. All of these were about in line with expectations and because they have almost nothing to do with Europe, had little market impact. The US data continue to be mixed and indicative of decent but sluggish economic growth.
The market may have a relief bounce today, but the question of whether Greece will exit the eurozone will continue to hang over the market. It is very hard to assess the politics of how this will play out. And if not on Greece, the focus could easily shift to Spanish or Italian bond yields. The stock market is likely to continue to be driven by assessments of the risks associated with the European debt crisis.
Founder and Chairman, Briefing.com
