Many Countries Are Worse Off Than We Are

These are real GDP growth rates for Q1 over Q4, not annualized (like we do here in the U.S.), for the G7 and the Eurozone:

  • Japan: -4.0%
  • Germany: -3.8%
  • Eurozone: -2.5%
  • Italy: -2.4%
  • U.K.: -1.9%
  • U.S.: -1.6%
  • France: -1.2%

Figures are from Bloomberg. Canada seems to be doing better, but Bloomberg doesn’t have quarter-over-quarter rates.

And here are the year-over-year figures:

  • Japan: -9.7%
  • Germany: -6.9%
  • Italy: -5.9%
  • Eurozone: -4.6%
  • U.K.: -4.1%
  • France: -3.2%
  • U.S.: -2.6%
  • Canada: -2.3%

Not pretty.

By James Kwak

21 thoughts on “Many Countries Are Worse Off Than We Are

  1. I wouldn’t trust any of the government’s numbers. The US still has a long way to fall especially considering the degree to which the government is interfering with the free market trying to correct the imbalances (i.e. house prices should fall to clear the market but the government is doing everything to prop up prices).

    The USD is also loosing steam and fast. I see this as the next crisis a run on the dollar and sky high interest rates soon.

    Good luck to have a recovery with those conditions.

  2. I wonder how much of the spread has to do with how quickly we have been able to cut orders from offshore suppliers. Since we are so much heavier into ‘service’ full impact hasn’t reached us yet?

  3. Comparing comparables would help even more. In the more efficient French economy, traffic jams count less, and gas taxes were brought up last summer. Moreover, always comparing to France, people borrow very little in general there, and so they are used to tighten belts at the first trouble, diminishing the quantity of transaction without the economy suffering. More relevant are the employment numbers (which are also measured differently). In France the employment dip was much less than the GDP dip, in comparison to the USA.

    Patrice Ayme

  4. And remember, some people are *hoping* for the Japanese experience.

    Things really are that bad.


  5. And even though US debt has increased over time, our ability to pay the debt (our GDP) has kept pace (or outpaced) our debt load. And our ratio of debt to income is no where close to where it was in the mid-40s.

    Again our GDP will likely outpace other countries, further strengthening our Growth/Debt ratio.

  6. Are you sure these numbers are correct? I recall hearing of US GDP dropping at about 6% (annualized) a few times … this could be month-end numbers, instead of quarter-end, but it should show up.

  7. The US number is 6% annualized. Annualized means that if the one quarter 6% rate were continued for three more quarters the four quarter or year over year rate would be 6%.

    To make the US number comparable to the other data divide by 4 to make it 1.5%. Not exactly because of the impact of compounding, but close enough.

  8. the hardest hit countries are exporting countries with lots of savings and large government safety nets. their gdp may suffer a bit but i doubt their domestic balance sheets are as bad as those numbers would indicate.

    the baltics are another story.

  9. Outputgrowth in Japan, Germany, Italy and the EZ comes mostly from exports. It is the weakness in the major supply side economies that causes this drastic contraction of GDP. This is no cause for celebration to be sure.

  10. I agree that the dollar’s fundamentals are very weak, but a run to where? Gold? Commodities? Certainly not the euro. Yen fundamentals are also weak. The yuan? Not nearly ready. Where to then?

  11. I don’t know about that. Japan’s balance sheet is pretty awful. Germany’s deficit is projected to quickly deteriorate (link 1).

    Moreover, this is likely to worsen over the next few years, as the debtor nations begin a process of deleveraging (link 2). Given that the #2 and #3 largest importers of German products are the US and the UK, respectively, I imagine that Germany will not see a substantial improvement in public finances for quite some time (link 3). It is unlikely that Germany’s other trading partners (France, Netherlands, Italy) will be able to soak up the excess.

    Note that the net surplus countries are initiating pathetically weak efforts to spur domestic consumption.

    Link 1:
    Link 2:
    Link 3:

  12. Canada is doing relatively better, but it is not even across the country. Central Canada (Ontario/Quebec) are getting hammered by weak demand for manufactured goods and higher Canadian dollar. Western Canada is holding up better do to natural resource prices. Also, jobs losses are up, but like most OECD nations Canadian dont lose healthcare when they lose their jobs, which is nice. Also, many Canadian (both companies and individuals) are using this as an opprotunity to buy US assets, whether real estate or existing businesses (Bank of Montreal cash purchase of portion of AIG’s insurance division).

  13. it is not pretty. just saying that germany isn’t 3X as bad as the US even though the number would indicate that.

  14. You’re certainly right on the weakness of ALL fiat currencies, but people will leave the eventually.

    There is no fiat currency that has lasted the test of time.

    I think people will run to anything real. Commodities being the best.

  15. The problem with commodities is that most of them are contingent on economic activity. If there is a true flight from the dollar, how likely is there to be enough economic activity to support a demand for commodities? That is, of course, outside of their role as a store of value…

    Gold maybe. Unlikely though.

  16. GDP is down significantly in japan, and daily consumption have changed as well.

    For example McDonald’s is now the leading fast food retailer here in Japan after many years of poor results. This has been mainly due to a dollar sale on burgers, which the Japanese have turned to in tough times.

    There is also a bonus season, which is roughly equal to another months salary. Yet this years bonuses have been cut back.

    The toll roads here have also instituted a cut in the costs of driving when using an automated debit system. People can now drive anywhere in japan for a max fee of 1000 yen on sundays.

    Yet you can get a 30 year fixed rate mortage for about 3%

    Things change slowly in Japan, but the pace of change has picked up of late

  17. Simply because our phony means of payment (i.e. the little rectangles of papers we call US dollars) become worthless does not mean there will no longer be viable economic activity.

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