It’s official: Eurozone back in recession
posted at 10:31 am on November 15, 2012 by Ed Morrissey
If you feel down about the American economy, perhaps a look across the pond will have you counting your blessings. Reuters reports that the Eurozone fell into an official recession last quarter, even though France and Germany had rebounded all the way back to a growth rate of, er … 0.2% (via OTB):
The debt crisis dragged the euro zone into its second recession since 2009 in the third quarter despite modest growth in Germany andFrance, data showed on Thursday.
The two leading economies both managed 0.2 percent growth in the July-to-September period.
But the resilience could not save the austerity-hit 17-nation bloc from overall contraction as the likes of The Netherlands, Spain, Italy and Austria shrank.
Economic output in the euro zone fell 0.1 percent in the quarter, following a 0.2-percent drop in the second quarter.
Those two quarters of contraction put the euro zone’s 9.4 trillion euro ($12 trillion) economy in recession, although Italy and Spain have been contracting for a year already and Greece is suffering an outright depression.
Of course, this isn’t good news, even comparatively speaking. We depend on demand from Europe for our own economy, and a recession there — even a mild one — will have a negative impact on the American economy. There is never a convenient time for that, but we’re on the precipice of the fiscal cliff at the moment, and most of our solutions to that depend on being able to generate robust growth in the near future.
What’s most troubling is the slow growth of the two central national economies within the EU. The resolutions on the table for the Eurozone debt crisis relies on Germany and France to supply enough support to allow nations like Greece, Spain, Portugal, and Italy to apply austerity measures to get their debt ratios under control. That low GDP growth rate in the core doesn’t provide much confidence that Germany and France can remain committed to that kind of support for the long run, especially with France driving entrepreneurs away with its new Socialist tax policies.
At some point, the Germans and French citizens will tire of having their production dedicated to rescuing less disciplined neighbors on the Continent. When that day comes, the Atlantic will not protect us from the shock waves — which is why it’s more urgent than ever for the US to get its own fiscal house in order.