Pierre Moscovici, Member of the European Commission in charge of Economic and Financial Affairs, Taxation and Customs (on the right), gave a press conference on the 2015 Autumn Economic Forecast. He said that the economic recovery in the euro area and the European Union as a whole is now in its third year. On the left Margaritis Schinas, Chief European Commission Spokesman. (Date: 05/11/2015. Location: Brussels – EC/Berlaymont. © European Union, 2015/Source: Jacquemart Jennifer,Shimera ,EC – Audiovisual Service).
The Brussels Eurocrats are trying to convince us all that the European economy, after the 2008-2010 fallout, is now on the right track towards an era of growth and financial security. However, real people out there are still waiting to taste the benefits of this impalpable improvement. Apart from the fact that Eurostat, the EU statistical service, has found that unemployment is much larger than the official rate reported, real incomes and consumption have not recovered after the abrupt fall of 2009-2010. Let’s follow the facts.
What is at stake here is the welfare of real people, who sweat under the new ‘relaxed’ employment forms, but still are threatened by income impoverishment and social exclusion. Not to say anything about the unemployed. According to Eurostat, people without a job are almost double than the official rate. The European Sting has presented this anomaly on 21 January 2014.
Twice as much unemployment
The relevant article concluded as follows: “Eurostat, the EU statistical service, revealed that the true unemployment rate in Eurozone during the third quarter of 2013 was much higher than the ‘officially’ recognized percentage of 11.5%, according to the definition of UN’s International Labor Organization. Including the three forms of de facto but not recognized by the ILO unemployment definition or ‘halos around unemployment’ as Eurostat calls it, the people without a job in Q3 of 2013 were 21.2% of the labor force. This is almost the double than the official rate”.
In any case, the key variable which by and large determines the welfare of people is the ‘real growth of household income and consumption per capita’. This is a good estimate of the actual betterment or worsening of welfare conditions of households. The term ‘real’ means that incomes and consumption have been normalized for inflation (deflated). As for the word ‘growth’, during the last six years, this was, most of times, a euphemism. Real incomes and consumption have been contracted instead of growing. In fact, for the mathematical economists income losses are negative growth.
Stagnant incomes
Nevertheless, there has been a good time for real household income and consumption. During the brief period of 2005-2007 those two variables had been continuously increasing but this tendency ended at the beginning of 2008. The same story is also told by the evolution of the total retail sales. The relevant Eurostat diagram is very eloquent. Retail sales kept increasing until the beginning of 2008. Since January of that year their volume (deflated amounts) kept falling up to March 2013. From that point in time on retail trade turnover started increasing again followed also by real household income and consumption. Unfortunately this dual improvement, although negligible as percentages, ended at the first quarter of 2015. Real household income and consumption per capita (seasonally adjusted) stagnated all along the first half of this year. This tendency has, very probably, continued during the second half of 2015 but we will be informed about it in a few months time.
Still, the Brussels bureaucrats insist that the EU and the Eurozone economy are on a growth path. Last week, the European Commission published its “Autumn 2015 Economic Forecast”, maintaining that there is a ‘moderate recovery’ for the European Union and the euro area. If this was so, the European Central Bank wouldn’t have suggested that it is ready to flood the financial markets with hundreds of billions of freshly printed euro, in order to avoid deflation (negative inflation) and revive the economy.
Incomes increased by … 0.1%
According to Eurostat, “In the euro area, in real terms, household income per capita increased by 0.1% in the second quarter of 2015”. The same source estimates that: “In September 2015 compared with August 2015, the seasonally adjusted volume of retail trade decreased by 0.1% in the euro area”. The evolution of household income per capita and retail sales by being good approximations of the general welfare, betray that in 2015 there has been an obvious stagnation. Very simply, the main cause of that are the totally wrong economic policies followed after the financial crisis of 2008-2010.
Germany repenting?
With Germany being the main ‘brain power’ behind the economic policies applied in Eurozone during the past five-six years, Berlin has to assume full responsibility for the present economic situation of Europe. It seems though that this must be the case, because Germany has stopped blocking the new extraordinary monetary measures proposed by the ECB President Mario Draghi.
The question now is whether Berlin’s repentance will be enough for the EU economy to revitalize and offer more opportunities to those threatened by impoverishment or already on the breadline. It’s highly probable that it’s already too late to redress the real economy with monetary measures. The freshly printed money will be soaked up by the banks and be rather used to cover their crimes.
No tears will be shed for the stagnating real house hold income and consumption whatsoever.
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