German Economy Contracted at Record Speed in First Quarter

May 15 (Bloomberg) -- The German economy, Europe’s largest, contracted the most in at least four decades in the first quarter after the global financial crisis curbed export demand and investment.

Gross domestic product dropped a seasonally adjusted 3.8 percent from the fourth quarter, when it fell 2.2 percent, the Federal Statistics Office in Wiesbaden said today. That’s the deepest slump since quarterly data were first compiled in 1970 and compares with the 3 percent decline predicted by economists in a Bloomberg News survey. It also marks an unprecedented fourth successive quarterly contraction.

Chancellor Angela Merkel’s government, which predicts the economy will contract 6 percent this year, is spending 82 billion euros ($112 billion) to haul Germany out of its worst recession since World War II. Some indicators have shown first signs of stabilization, with manufacturing orders rising for the first time in seven months in March and business confidence rebounding from a 26-year low in April.

“I believe there are some grounds for being optimistic that the pace of decline in economic activity will decelerate markedly in the months ahead,” Bundesbank President Axel Weber said this week. “However, it is certainly not advisable to be overly optimistic that the recovery process is safely on track. This will most likely be a gradual process.”

The first-quarter slump was led by a decline in exports and investment, the statistics office said. Consumer and government rose slightly in the quarter, it said. In the year, the economy shrank 6.9 percent when adjusted for the number of working days.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aBSH3N57FdpQ&refer=home

 

Shocker!! An entire nation built solely on supplying a debt-laden world with products nobody can afford (anymore) is suddenly in trouble. Who would've thunk?!

 

What I love about this factual story is that every talking head equity strategist, in lame attempts to keep the illusion of 'Green Shoots' alive and well, is declaring this the quarter that 'should mark the bottom.'

Why is this, precisely? They don't provide any reason; just trust them?

The attempts to prevent confidence falling even further aren't working anymore, because the tactics are ludicrous.

 

there should be better education about green shoots because that's what people are going to be eating for the next 10 years, this is a veggies' world

 

With all due respect, this is old, old, old news. We're entering the 3rd quarter in a few weeks. Everybody on the planet has known for a long time that the 1st quarter was a disaster. This news is about as relevant to the future direction of markets as the score in yesterday's Phillies/Dodgers game.