Global Macro Monitor

“We can no longer invest in the old, fossil-fuel technology and we don’t yet know in which new technology to invest.” – Martin Gorning, GIER

• Germany’s inability to generate meaningful growth is casting a shadow over the long-term prospects for the economy 
• A country long seen as Europe’s motor of expansion is increasingly looking like a deadweight
• Of the 10 quarterly GDP readings since Scholz took office, more than half showed either nearly no growth or a contraction
• At the heart of Germany’s weakness is the manufacturing base that sustained export-led growth for much of this century
• The end of cheap gas imports from Russia was a body blow that companies are still struggling to get past, especially in energy-intensive industries
• Germany’s car manufacturers, a central pillar of the economy’s past success, are also trying to make up for lost ground as they confront China’s head start in production of electric vehicles 
• Only 12% of Germany’s newly registered vehicles are electric — last year it was more than 20%
• The roots of the economy’s struggles go beyond cyclical volatility — half of an estimated 7% shortfall in industrial activity is structural
• Germany is struggling with a shrinking workforce, bureaucracy and an uncertainty over the political direction for decarbonizing the economy
• The self-imposed restrictions on government borrowing due to the so-called debt brake means there’s little leeway for public spending to address the country’s long-term economic problems – Bloomberg

…reforms have also augmented fiscal strength and lowered the risk of default. The number of countries with bonds trading at distressed levels had subsequently halved in the space of a year, according to data compiled by Bloomberg. – Bloomberg

COTD:  Chart of the Day

The US economy grew faster than expected last quarter, with GDP rising at a 2.8% annualized rate compared to 1.4% in the previous quarter. This growth was driven by strong consumer demand and business investment, including an outsized increase in nonfarm inventories.

Personal spending increased by 2.3%, led by health care and durable goods, such as cars and furnishings.

The Core Personal Consumption Expenditures (PCE) price index rose 2.9%, indicating persistent inflationary pressures despite easing from Q1. Business investment grew at the fastest pace in almost a year, particularly in equipment.