Now, the European statistical agencies report France joined Italy and Spain's recessions during the first quarter, and economic activity across the entire Eurozone continued to contract.
The straight jacket imposed by Euro-think -- allegiance to a failed experiment in a common currency, ill-conceived and overzealous austerity measures, and halting and inadequate labor market reforms -- caused continued economic contraction across the entire Eurozone.
Europe's GDP fell 0.2% in the first quarter, after dropping 0.6% in the fourth quarter, and has been falling for six quarters.Germany is barely growing -- GDP was up a scant 0.1% after falling 0.7% in the fourth quarter. Europe's situation would be akin to California being in neutral, while the rest of the U.S. went backwards -- profoundly! In France, investment is sinking like a stone -- new spending by non-financial businesses was down 0.8%, after falling 0.7% in the fourth quarter. Inadequate labor market reforms, France's virulent protectionists instincts and a rudderless socialist government, coupled with a euro that is overvalued for much of the French economy, are driving businesses away. Even though consumer spending was nearly flat, austerity measures and weak investment spending pushed GDP down by 0.2% in the first quarter, after a similar loss in the fourth quarter. Italy's data told a similar sad tale -- GDP fell 0.5% after falling 0.9% in the fourth quarter. Elsewhere, unemployment in Spain and Greece remain at alarmingly high levels. Outside the Eurozone, the United Kingdom narrowly escaped a recession -- first quarter GDP was up a slim 0.3%, after falling a similar amount the previous quarter.
For the Eurozone, the positive notes are that the first quarter contraction was not as severe as in the fourth quarter, and recent snippets of data for spring economic activity have been a bit less discouraging in the North -- indicating the U.S. spring swoon may be mirrored by some moderation in the European malaise. Germany and the other northern countries are quite dependent on the South to export their industrial products, and are much advantaged by the euro, which tends to be undervalued for their economies at current prices, while overvalued for the southern region.