Investing.com - Financial Markets Worldwide
Get 40% Off
Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

US-Euro Area Industrial Production

ByMarc Chandler
Published 03/22/2013, 06:07 AM
Updated 07/09/2023, 06:31 AM

This Great Graphic was created by an old friend Rab Jafri. Drawing on Bloomberg and Eurostate data, the chart depicts the performance of US and euro area industrial output over the past several years.

It shows that the US collapse in industrial output was not as steep as in the euro area, but the recovery began a bit later. Through Q1 2011, there was an apparent synchronized recovery. However, since than the divergence has become increasingly evident. The disappointing flash euro zone PMI, in contrast to greater than expected gain in the Markit preliminary US PMI, warns that the divergence is widening further.
IP
Some observers may argue that the out performance of the US is a function of the reluctance of the US to take its foot of the fiscal accelerator. This, we argue, is misleading. First, for the past few years, more often than not the US government sector was a net drag on GDP, with few exceptions. As fast as Washington may have arguably been spending, the states and local governments were cutting back even faster.

Second, the combination of the fiscal cliff and sequester resolutions while several European countries are given more time to reach deficit targets, means that US fiscal consolidation will be greater than the euro zone's this year.

Third, the US may have gone for a more pro-growth strategy at the cost of more gradual fiscal consolidation and is saddled with a large deficit and mounting debt. The euro area went with fiscal consolidation and has poor growth to show for it and large deficits and debt. If it were a poker game, wouldn't you prefer US cards over the euro zone, even if it is not a royal straight flush.

Latest comments

Install Our App
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.