Today is Election Day in Germany. Here's what they're up against:
Since the middle of 2019, Germany's GDP is down by 0.16%. By comparison, over the same period US GDP is up 13%. That's 80 times more.
23 thoughts on “Chart of the day: The terrible German economy”
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But it's okay because they're running trade surpluses, which means everyone else is subsidizing them.
SO UNFAIR!! Still, I don’t see Trump slapping a tariff on Mercedes and Porches. He doesn’t want to piss off his true base.
If this gets any traction on fake news, MAGAs and FOX will ignore the Eurostat source, and wait for an "honest government" report produced by 2.0
It's nonsensical to compare a negative value and a positive value in that way. By that notion if Germany's GDP were down by 6.5% it would only be half as much.
The real dodgy part of Kevin's post here is his failure to use per capita numbers.
The corollary to the Drum Rule (always adjust for inflation) should be: always account for population growth. US population growth, while much slower than in previous eras, has been something like 3x as fast as Germany's since 2019.
America's macroeconomic performance has been a lot stronger than Germany's over the last half decade or so (probably the best of any rich country), but the disparity isn't quite as dramatic as Kevin's chart make it out to be.
Results are coming in and the CDU (center right) has the largest chunk of votes at the moment, followed by the damn AfD (neo-Nazis). The SDU (center left) and its milquetoast chancellor Olaf Scholz have been thoroughly shellacked. I don't think anyone wants to form a coalition with the AfD, but forming a CDU/SDU "grand coalition" will also be tough, given how poorly the SDU has done and its not clear if the CDU's traditional coalition partner, the FDP (liberal/libertarian) will even make it over the bar into the Reichstag at all this time. The Austrian conservatives recently tried to reach a deal for a coalition with the Freedom Party and it blew up in their faces and now Austria probably faces new elections, also with a stagnated economy and people pissed about unchecked migration. Like us, Europe's in for a rough couple of years.
Migration is the issue that's driving a lot of unrest all over the globe. People can and should flee shit holes where they have no chance of a quality life. Fixing the shit holes so that people want to live there is pretty much starting a war with the entrenched local power brokers and nobody wants to spend their money nation building when the folks back home want services.
The fact that the anti migration factions have tied their lot to ethnic purity, religious and other social conservatives is the thing that worries me most. That's a toxic combination that leads to genocide.
Yes, that is correct, but most of the migration is actually caused by wars. Too many weapons in the world and not enough aid.
And cutting programs like USAID will only make the problems worse and increase migration.
The big news of the election is the comeback of die Linke - which was formed from parts of the old PDS (ex-communists) and the left faction of the SPD by Oscar Lafontaine in 2007. Everything else is small cheese in comparison.
It did particularly well amongst young voters (Under 25).
Note the BSW (which hopefully won't get in) are running at 4.9%, the same as the Linke got last time (5% is needed to get seats). The BSW is a break away Party from the Linke formed by Oscar Lafontaine's wife Sahra Wagenknecht. The Linke are standing at 8.6%, so the anti-capitalist left are running at 13.5% when they got 4.9% last time. (The main difference between the BSW and the Linke is a pro-Russian stance by BSW.) The pair Lafontaine/Wagenknecht are an egotistical curse. BSW - stands for Bundnis Sahra Wagenknecht. Who calls a party after themselves?
Who indeed? Even Israeli politicians don’t, although if you are anybody at all in Israeli politics, you have to have a party of your very own.
Russia's invasion of Ukraine has hurt Europe, and Germany in particular, fairly hard--as far as the economy is concerned.
Good point. Mostly loss of cheap Russian gas and trade I assume. And Russia is meddling with their political system even more than with ours.
For a really good clear analysis and explanation of the German political system, recent history, and current voting check out FelifromGermany on YouTube. She has been living in the US for some years and has dual citizenship. She usually does much lighter stuff but she really has this down with video clips and graphics (charts and graphs!) and everything.
Thanks, I hadn't seen Feli.
I guess they need what we’re getting….
“The economic and structural weakness of the German economy is hitting the labor market with full force. It is five minutes to twelve."
Dulger said there needed to be a reduction in bureaucracy, reforms to non-wage labor costs, and lower energy prices.
"Then Germany will be back on a growth path. Only then will the turnaround in the labor market be successful."
Yes. This is becoming the European consensus, not just Germany. Since 2008 Germany's GDP / Capita has amazingly underperformed the US. https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?contextual=US&end=2023&locations=DE-US&start=2008&view=chart. They have dropped from almost parity to over 30% less.
The European model was always "We will trade a fraction of a percentage of annual growth for a fairer kinder society." In the first few years it works fine and looks like a good trade, but remember Buffet's Law - "Compounding Interest is the most powerful force in the universe." That fraction of a percentage compounded over almost two decades has turned into a 30% lag in GDP per capita. Today's 2nd quintile German lives like a 3rd or 4th quintile American. As they compare with Americans Germans are beginning to feel equally poor.
Unless Germany changes its model to match the American model this underperformance will continue to compound. At a certain point it becomes impossible - Germans with ambition will all emigrate to the US like Chinese of 30 years ago and then when you lose your best and brigtest your decline just accelerates.
The European model was always "We will trade a fraction of a percentage of annual growth for a fairer kinder society.
Not remotely true. In the long decades after the War—going right up to the Great Recession—most of the great social democracies narrowed the output and productivity gap between themselves and the United States. In other words for years, the majority of these countries grew per capita GDP a bit more quickly than the US, even as they built extensive welfare states.
The notion that a generous safety net, robust taxation, and high quality public services are inconsistent with strong growth is bullshit. As with anything there are limits, of course (a state that spends 50% of GDP is probably going too far, just a like a state that cuts government to the bone). But the simplistic right wing claim you've espoused here is at odds with reality.
The leap ahead of other rich countries the US has managed over the last half decade or so appears to flow mostly from a stronger response to the economic turbulence of the pandemic: IOW insufficient government spending on their part as opposed to plenty of stimulus on the part of America.
I live in Germany and this needs a bit of pushback.
1. Why did you pick the starting point you did. Clearly CORONA had a lot to do with that.
2. The German population has risen recently only because of immigration. In fact, there is a massive skill shortage because of demographic developments.
3. Why do you insist on not looking at per capita income, which is the only honest comparison,
4. The recent problems are mostly to do with the obstinacy and idiocy of the FDP who refused to either allow tax increases or loosen the debt limits, in spite of the need for investment for the energy transition (and infrastructure repairs) and to cover the flood of Ukrainian refugees. This dampened domestic demand. Removal or restiction of subsidies for EVs and new heating systems were particularly damaging. Why dampen demand when you are running balance of payments surpluses and badly need more investment?
The trade surplus is not an accident - it is a longstanding policy goal. And since balance of trade plus investment balance must equal zero, it follows that as long as you have a trade surplus the net investment balance will be outward.
All the more reason to use public money for inward investment.
Actually, Germany's underperformance has been since 2008. https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?contextual=US&end=2023&locations=DE-US&start=2008&view=chart
During that time Germany's GDP per capita has dropped from near par with US to a third less.
People are way too focused on trade balance, especially Germans. Economies not operate in a zero-sum game and no one's on the gold standard.