From Jeffrey P. Snider, at davidstockmanscontracorner.com:
There has been a lot made of the fact that European GDP wasn’t worse in Q4, especially as Germany rallied to the continent’s economic defense. While initially the reactions were unabashedly positive, I think reality set in more so later after fuller digestion. In other words, everything we thought about Europe before today is still a problem, only that Germany pulled forward or “borrowed” some “demand” from Q1.
In any case, though Eurostat hasn’t updated its full database yet (this was the “flash” GDP reading, after all), Q4 was undoubtedly “aided” by Europe’s descent into “deflation.” The only question remains to what degree has nominal GDP degraded over previous quarters. Like Japan’s three decade journey, there is nothing about a negative calculated inflation rate that “helps” an economy – only the simple math of how GDP is constructed.
So even in real terms there is nothing to be excited about, only that the stunted nature of 2013’s “recovery” from the prior “recovery” isn’t yet worse. Until we get the fuller updates from Eurostat, we again don’t yet know what GDP looked like in nominal terms, but given the HICP inflation figures for the last three months of 2014 we have a good idea.
To continue reading: ECB Financial Repression Is Not Helping
