Economy in Brief

GDP trends cooled across the European Monetary Union in the third quarter as updated GDP reports begin to emerge. Quarter-to-quarter growth in the monetary union fell by 0.2% in Q3 after rising 0.6% in Q2. Finland, France, Germany, Ireland, Portugal, and the Netherlands all logged declines in GDP in the third quarter. Of the ten (EMU member and nonmember) countries presented in the upper portion of the table (below), GDP growth decelerates in six of them; in addition, there is deceleration for the monetary union as a whole. The United Kingdom also shows decelerated growth in the third quarter. Pooled together, the four largest EMU economies register deceleration, the rest of the monetary union on its own decelerates, the median for the monetary union decelerates, logging a 0.5% decline in GDP in Q3 after a 1% gain in Q2- decelerations are rampant. The major exception to these trends of course is ‘across the pond’ generated in the United States where 5.2% GDP growth in Q3 trumps a 2.1% gain in Q2. Acceleration lives...but the Fed is quickly seeing deceleration in its wake, a reason to moderate its policy path. We are living in an age of kinder-gentler central banks…for better-or-worse.

GDP growth rankings are weak- The far-right hand column of the table chronicles the ranking of GDP growth on data since 1997. Among European Monetary Union members, only Portugal has a ranking that exceeds its historic median on this timeline (above its 50-percentile). The median result for the nine reporting EMU members in the table is a standing at the 24.5 percentile, right at the border for the bottom quartile of the historic queue of growth rates. Of course, this stands in marked contrast to United States where its 5.2% growth rate has a 72.7 percentile standing, a standing nearly in the top quarter of all growth rates over the same period.

Growth rates in the table are color-coded to emphasize slowdowns and speedups. The four quarterly year-over-year calculations for each country or area show a preponderance of red numbers indicating slowdown. GDP growth has been slowing down persistently just about everywhere apart from - you guessed it-the United States.

The EU Commission survey for the EMU and its members ticked up to 93.8 in November from 93.5 in October. Still, the overall index has a queue ranking on data back to November 1990 in its 26th percentile. The five component indexes for November showed an improvement in consumer confidence and in construction against a deterioration in the industrial gauge and unchanged month-to-month readings for retail and services.

In terms of standing, the construction sector in the EMU has a solid 72.8 percentile standing while retailing has held at a 55.4 percentile standing; both are above historic medians. However, the industrial sector ranks in its 26.7 percentile, with services in their 40.4 percentile and consumer confidence even weaker at its 17.9 percentile - all three are below their respective historic medians.

All five sectors plus the headline continue to reside below their pre-COVID levels of January 2020, a period of nearly four years. The EMU gauge has been below its January 2020 level 72% of the time. Only the industrial sector has been below its January reading less, only about one-third of the time. All other components have been below their January 2020 levels more than 75% of the time over the past nearly four years.