Thursday, May 15, 2014

Great Expectations -- More Disappointment

Eurostat released first quarter growth numbers for Europe today and they were "disappointing."  They are always "disappointing."  Eurozone growth was eight times that of US 1st quarter growth, which was also "disappointing."

Anemic or non-existent economic growth is the reality in the US and Europe.  "Great expectations," though, constantly present a completely different story.  Prognosticators continually predict surging growth for the US and Europe.  "The economic recovery is finally here!"  That is the battle cry of the soothsayers.  And they are always "disappointed."

Europe is growing at 0.8 percent annually and the US is growing at 0.1 percent annually.  Both of these numbers are within the margin of error of revisions, common to GDP growth data.   Europe is supposedly in the early stages of recovery.  The US is still "recovering."  But 1st quarter 2014 data shows that there is a good probability, not quite 50 percent, that both Europe and the US are actually contracting, not expanding.

Both Europe and the US are stagnant economies and have been for quite a long time.  They aren't recovering; they are sputtering along.  The results are predictable.  Incredibly bad economic policies in Europe and the US are reaping their ultimate and predictable rewards -- economic stagnation.  This is the predictable price of high taxation, increased regulation, and a culture war against wealth accumulation.

Unless economic policies change, we will get more of the same, regardless of the Great Expectations of economists who think that all is well.

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