Yesterday's headlines rang out with talk of Europe inching toward the end of recession. It's unknown as to whether this signifies the beginnings of a full-fledged recovery or simply a boost due to a temporary increase in consumption. Time will tell. But the better-than-expected second quarter in Europe, notably in France and Germany, is a sign of how quickly the economy -- and the media's coverage of it -- can change.
Last November, the Economist reported on the Euro zone's first-ever economic recession, underscoring Germany's woes. Bank of America economist Holger Schmieding explained that in Germany, "The case for tax cuts ... has never been stronger." In early May of this year, European Union officials hung their heads lower and told the world that the recession was "deep and widespread," again highlighting Germany's problems and predicting that it would be hit the hardest due to a drop in exports. It seemed Europe was in for a long and tumultuous descend into poverty.
But yesterday? The story changed entirely: Statistics revealed that France and Germany's economy actually grew (albeit slightly) in the second quarter because of incresed exports to Asia, consumption and massive government spending, lifting the two European superpowers out of recession. The gloom surrounding the EU's economic vulnerability shifted to hope that the entire globe is prepared to prosper once again. Germany, once feared to be the harbinger of crushing economic hardship, is now expected to lead Europe to safety. All in a few months' time.
Is Europe's economy really this volatile and unpredictable, or is the media (and the public!) consistently jumping to unnecessarily dramatic conclusions about recessions and recoveries? At this point, anything is fair game.
Thankfully there's still room for tepid and vague speculation amongst the cheers and the groans. Gilles Moec, Deutsche Bank's senior European economist in London, added a hefty dose of skepticism to yesterday's uplifting news. "The recovery is very fragile and thinly based," he said. "Yes, the recovery has started, but we don't think it will be that strong in the second half."
Discuss
Luke Allen on August 15, 2009, 2:29 AM
Well to answer the question: The media is scatter-brained because we as individuals are. Think of the last time you tried to answer a complex emotional family question with a quick quip? Often, we overly compartmentalize and dramatize EVERYTHING in us and therefore, we look for answers in an overly compartmentalized and dramatized way. As the great prophet once said: “Why do you look at the speck in your neighbors eye and forget the log in your own.”
I may be over simplifying this issue but I’m so tired of the people consuming and reading the media, complaining about it. The media, just like art. is not anything more than the reflections of society and by trying to focus on its inequities one becomes as intellectually dishonest as the protesters to new music.
Orion Jones on August 17, 2009, 1:04 PM
I would guess the headlines that change faster than a national economy ever could have to do with the way growth is calculated, like how if you stop looking for a job you’re no longer considered unemployed, and the strong psychological incentive there is to predict a recovery. The Big Think interview with Dean Baker said as much: just as economists didn’t benefit by going public about the housing bubble, how would they benefit in this case by being sticks-in-the-mud while everyone else says we’re getting un-stuck?
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