Germany’s economy will grab the macro headlines in Europe today with the monthly update on unemployment data. Later, we’ll see a new report on business sentiment for Europe from the European Union. In the US, the main event for economic news is the government’s “advance” estimate of gross domestic product for the third quarter.
Germany: Unemployment (08:55 GMT) Berlin’s extreme views of fiscal austerity and monetary policy have been weighing on Eurozone's macro climate for several years, and now the severe policy preferences seem to be causing trouble on the home front. "Germany fails to recognise that the relative health compared to the rest of Europe doesn't mean that it's doing its homework and that economic policy is right, and Germany needs to do its homework. It still has a lot to do," observed the president of the German Institute for Economic Research.
The question is whether the “relative health” comment is due for a downgrade in some degree? It’s already clear that Europe’s biggest economy is struggling, perhaps to the extent that a mild recession has already set in. Sentiment readings for the consumer and business sectors suggest as much lately, as do various hard-data reports – falling exports, for instance.
In the current environment, it’s no surprise to see that economic forecasts are being downsized. The latest reduction includes the diminished expectations at Germany’s DIHK Chambers of Commerce, which pared its growth estimate for 2015 this week to a slim 0.8% for Germany – nearly half as much as the previous forecast.
“The confidence at companies has received a significant dampener,” the group explained. “Geopolitical worries not only leave their marks in business relations with crisis regions. Businesses are also more sceptical in their assessment of domestic demand – it now tops the list of business risks.”Today’s monthly release on jobless figures will provide a fresh set of number for assessing the macro outlook. In the previous report, the number of unemployed workers in Germany posted a slight increase. That’s hardly worrisome, although it’s clear that the consistently hefty declines in the early part of this year through May now look like ancient history. Still, the trend looks wobbly at worst, at least through August. Will today’s September update tell us otherwise?
EU: Economic Sentiment (10:00 GMT) The European Union’s (EU) flash estimate of consumer confidence for the Eurozone turned a bit higher for October, breaking four monthly declines. Will today’s update on the mood in the business community perk up as well?
Even if today’s data dispenses a degree of optimism, it’s unlikely to change anyone’s view that another phase of recession remains a real and present danger for Europe. The Economist lamented over “the world’s biggest economic problem” in this week’s issue, advising that “the zone’s overall inflation rate has slipped to 0.3% and may well go into outright decline next year. A region that makes up almost a fifth of world output is marching towards stagnation and deflation.”
Is there any chance, however slim, that the euro area could manage to squeeze by and avoid the fate that now seems inevitable? Maybe, or so the latest third-quarter GDP estimate from Now-Casting.com suggests. Eurozone growth for the third quarter is projected to be a marginally positive 0.07% on a quarter-on-quarter basis. That’s more or less unchanged from the flat performance in the second quarter, based on Eurostat’s official numbers. Unfortunately, Now-Casting.com’s fourth-quarter estimate looks a bit worse, with GDP expected to suffer a slight contraction.
Today’s sentiment update from the EU won’t reflect much if any relief from the dark trend afflicting Europe. But if business sentiment avoids another decline in October - and the revised consumer estimate holds on to a slight increase - the grim outlook will at least look a shade less threatening. 
US: GDP (12:30 GMT) In comparison with the strong 4.6% GDP increase in the second quarter, today’s preliminary third-quarter report is expected to deliver relatively modest results. The crowd’s looking for a 3% rise in GDP for the July-September period (seasonally adjusted annual rate), based on the consensus estimate via Econoday.com. My econometric modelling suggests the possibility for a slightly lesser gain. But most analysts agree that the third quarter will fall well short of the second quarter's torrid pace.The comparison with the previous quarter isn’t going to impress the market today, but the sight of a decent if unspectacular growth rate for the US will provide more evidence that positive momentum endures. And let’s be clear: if the consensus number holds up, a 3% growth trend will look decent - especially when compared with the stagnation-or-worse scenario that currently hangs over Europe.This week’s disappointing numbers on durable goods orders for September offer a counterpoint to the optimism, but the bearish interpretation of this data looks excessive at the moment. As Wells Fargo pointed out on Tuesday, there’s still a fair amount of positive momentum when you look past the latest data point. “Core capital goods orders rose 10.4% at an annualised rate in the third quarter, following a similarly strong 11.8% gain in the second quarter,” the firm explained. Keep in mind too that despite the September decline in new factory orders, the year-on-year comparison remains positive (as it has been since March).
Meantime, several broad measures of the macro trend tell us that the tailwind for growth remains conspicuous. Indeed, the September update of the Chicago Fed National Activity Index showed that “economic growth picked up” last month.
The bottom line: today’s GDP report will probably show that the US economy expanded at a moderate pace in the third quarter. 
To subscribe to the Daily Shot letter by e-mail please enter your e-mail address here: Subscribe to the Daily Shot