The euro area economy contracted in the second quarter with gross domestic product for the seventeen-nation currency zone falling 0.2 percent from the first quarter. The seemingly ever-worsening debt crisis and continued rounds of budget cuts have led to recession in six euro zone countries and stoked fears that the entire euro zone could follow the UK into a double-dip recession.
Greece is in the fifth year of a recession and new data showed that the Spanish, Italian, Finnish and Portuguese economies are shrinking. Germany’s economy grew 0.3 percent and France’s, 0.0 percent (although this figure was reached by rounding up from -0.045 percent, meaning that its economy actually contracted).
Unemployment in Portugal rose to 15 percent. Out of a workforce of 5.5 million, 826,000 are now out of work.
Last month, euro zone consumer and business confidence fell for the fourth straight month, weakening especially in France, Germany, Finland and Austria. Industrial production has also fallen.
Nonetheless, as the contraction was smaller than expected, markets were cheered and share prices rose across Europe. But European leaders face an uphill effort to restore investor confidence in the face of layoffs by companies including Deutsche Bank (Germany’s largest lender), PSA Peugeot Citroen (Europe’s second-biggest carmaker) and RWE AG (Germany’s second-largest utility).
In the US, retail sales jumped 0.8 percent and, at $404 billion, were 4.1 percent higher than in the previous year. Companies including Home Depot and Estee Lauder reported higher net profits and the US housing market is albeit slowly, rebounding. But analysts emphasized that the recovery of the US economy remains fragile, though enough to keep the Federal Reserve from taking action when it next meets.
Given all this, it is no surprise to hear that Italians are saying farewell to luxury cars. In an era of austerity, la dolce vita can only become something a bit more bittersweet.
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