Friday, February 3, 2012

Eurozone Retail Trade Down Again in Dec

Eurostat has the latest.  It appears that the slide in the Eurozone is very gradually accelerating.  Tim Duy has a lot more well worth reading.
At this risk of beating a dead horse, I reiterate that I don't see how the European situation comes to a happy conclusion. Conditions in Greece appear to be deteriorating rapidly. Via Athens News, retail sales are in freefall:
Retail sales by volume fell 8.9 percent year-on-year in November after a 10.8 percent drop in October, statistics service data showed on Tuesday.

Households, burdened by austerity measures to plug deficits and rising unemployment, have cut back on spending.
Consumer confidence has also been hurt by a climb in the jobless rate to 17.7 percent in the third quarter.
Officially, hope springs eternal:
"Increasing unemployment and austerity are likely to continue weighing on disposable incomes and consumer demand in the first months of 2012. However, a positive conclusion of the PSI deal and the approval of the second bailout package could provide a kind of positive shock to business and consumer sentiment," he added.
Right, good luck with that, as the next agreement is only about tightening the screws even more. How exactly will consumer confidence get a boost given an acceleration in wage cuts, a late holiday gift from the Troika.
At the same time, US economic news keeps getting better, to the point where we are now getting decent employment reports:
Total nonfarm payroll employment rose by 243,000 in January, and the unemployment rate decreased to 8.3 percent, the U.S. Bureau of Labor Statistics reported today. Job growth was widespread in the private sector, with large employment gains in professional and business services, leisure and hospitality, and manufacturing. Government employment changed little over the month.
Can this decoupling continue if the situation in the PIIGS countries worsens further, as it seems it must?  I guess my assumption at this point is that main transmission mechanism would have to be via financial institution failure - if the ECB can continue to prevent that, maybe the US will do fine, this time around?

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