No, Europe hasn’t been pauperized

Earlier today I was browsing through a Wall Street Journal piece headlined, "Europeans Are Becoming Poorer." The basic theme is that the US has recovered from the pandemic better than Europe, and that's true enough. But the more I read, the fishier things got. The numbers were all over the map and weren't adjusted for inflation, which is crazy during a time when inflation is running high and makes a real difference in cross-country comparisons. Some of the numbers seemed wildly too pessimistic. Finally, when I ran into the phrase, "the pauperization of Europe," I'd had enough. Here are five charts that show how Europe is really doing.

First up is consumption over the long term:

The US is higher than most of Europe, but the broad growth rates are similar. The Journal piece makes a point of claiming that European consumption has "stalled" since 2008, so here's that:

Over this timeframe, consumption growth in Europe has been better than the US. Now let's zoom in specifically on the period since the pandemic, which is the main focus of the Journal piece. Here is real GDP growth over the past three years:

The US is the strongest performer, but most of Europe is doing OK, not getting poorer. Only Germany and the UK are doing really badly—and in the case of Germany this is a minor adjustment after many years of extremely high growth. Here is consumption:

Again, the US is on top and much of Europe is down but hardly impoverished. The EU as a whole is up 0.2%, which is no great shakes but neither is it negative. Finally, here's household income:¹

The Journal seems to think the US has seen strong income growth lately, but nothing could be further from the truth. Adjusted for inflation, earnings are nearly flat since the beginning of the pandemic while earnings in Europe are up 1.6%.

Nickel summary: US growth has been considerably stronger than in Europe, but income growth has been weaker. For its part, European growth has been sluggish, but it hasn't gone down and the continent is a long way from being "pauperized." I mean, come on.

¹This is a smallish set of countries because I was limited to those that have reported 2022 income.