{"id":191041,"date":"2023-05-26T11:45:00","date_gmt":"2023-05-26T15:45:00","guid":{"rendered":"https:\/\/ibkrcampus.com\/?p=191041"},"modified":"2023-05-26T11:58:07","modified_gmt":"2023-05-26T15:58:07","slug":"down-goes-deutschland","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/macro\/down-goes-deutschland\/","title":{"rendered":"Down Goes Deutschland"},"content":{"rendered":"\n<h2 class=\"wp-block-heading\" id=\"h-what-s-going-on\">What&#8217;s going on?<\/h2>\n\n\n\n<p>Data out on Thursday&nbsp;<a href=\"https:\/\/www.cnbc.com\/2023\/05\/25\/german-economy-enters-recession-as-first-quarter-gdp-data-is-revised-lower.html\">showed<\/a>&nbsp;that Germany, the industrial titan of Europe, belly-flopped into a recession last quarter.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-does-this-mean\">What does this mean?<\/h2>\n\n\n\n<p>Germany\u2019s economy shrank by 0.5% in the last quarter of 2022, so when reports for the first quarter of&nbsp;<em>this&nbsp;<\/em>year showed zero growth, economists heaved a sigh of relief. See, stagnation isn\u2019t pretty, but it\u2019s better than the true bogeyman \u2013 a \u201ctechnical recession\u201d, when an economy shrinks for two straight quarters. But there\u2019s been a plot twist: revised figures just revealed a 0.3%&nbsp;<em>contraction<\/em>&nbsp;in the first quarter of this year. Cue the dramatic music \u2013 because that means Germany\u2019s in its first recession since the pandemic.<br><br>The main culprit was household consumption, with spending on everything from food to finery taking a nosedive as consumers tightened their belts. But even in other areas, the writing was on the wall: after all, indicators for the all-important manufacturing sector have been flashing red for some time now.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-why-should-i-care\">Why should I care?<\/h2>\n\n\n\n<p><strong><em>The bigger picture:&nbsp;<\/em><\/strong><em>The worst is yet to come.<\/em><\/p>\n\n\n\n<p>This isn\u2019t just a short-term hiccup for Germany. The country\u2019s firms are already catching a chill, with business confidence slipping for the first time in seven months in May \u2013 and the IMF\u2019s tipped Germany to emerge as the worst-performing big economy this year. With a series of rate hikes on the horizon too, households and businesses are set for an even tighter squeeze. That\u2019s bad news for the eurozone: as the biggest economy in the bloc sinks, the rest of the crew could be dragged down with it.&nbsp;<br><br><strong><em>Zooming out:&nbsp;<\/em><\/strong><em>Misery will have company.<\/em><\/p>\n\n\n\n<p>The US is expected to join the recession club by the second half of the year \u2013 with the debt limit debacle only adding to its woes. See, that situation\u2019s essentially a lose-lose: a prolonged political standoff would hurt the economy, but any deal will probably come with spending cuts that\u2019ll do serious economic damage too.<\/p>\n\n\n\n<p>&#8212;<\/p>\n\n\n\n<p>Originally Posted May 25, 2023 &#8211; <a href=\"https:\/\/go.finimize.com\/wp\/news\/down-goes-deutschland\/\">Down Goes Deutschland<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Data out on Thursday\u00a0showed\u00a0that Germany, the industrial titan of Europe, belly-flopped into a recession last quarter.<\/p>\n","protected":false},"author":186,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5,18,8,9,26,3],"tags":[5595,9362,609,313,578],"contributors-categories":[13597],"class_list":{"0":"post-191041","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-europe-middle-east-africa","7":"category-macro","8":"category-region","9":"category-securities","10":"category-text-articles","11":"category-traders-insight","12":"tag-deutschland","13":"tag-economic-outlook","14":"tag-economy","15":"tag-europe","16":"tag-germany","17":"contributors-categories-finimize"},"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast SEO v27.3) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ 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