- Q1 GDP Growth Jumps 1.1% on Strong Personal Consumption
- A Strong March Leads to a Surge in Chinese GDP in Q1 2023
- Durable Goods Retail Sales Suffer from High Interest Rates and Wary Consumers
- Choppy GDP Means UK Should Avoid Q1 Recession
- Japanese Consumer Confidence Jumps to Highest Level in Over a Year
- The End of Summer Sees the End of Disinflation in Europe
- Labor Market Indicators are Starting to Unify on Easing in Hiring
- Inflation and Tight Financial Conditions Weigh on the German Consumer
- Euro Area Money Supply Contracts for the First Time Since 2010
- Dismal Economic Data Out of Germany
- Core Durable Goods New Orders See Gentle Uptrend in July
- More UK Data Pointing to Q3 Decline
- Whispers of a UK Contraction in Q3
- Japan's Core Inflation Resumes Uptrend in July
- Early July Economic Data Leads to a Sharp Increase in Q3 Growth Expectations
- UK CPI: Energy Inflation Crashes but Services Inflation is Still Sticky
- China's Weak Start to Q3 Means More PBoC Easing
- Bank of Japan is Too Optimistic on Inflation
- The Bank of England Pauses in a Near Split Decision
- UK Inflation August Update: A Precursor to the Bank of England's Announcement
- Housing Starts Tumble in August Amid Rising Mortgage Rates
- US Retail Sales Grow at Fastest Monthly Rate Since the Start of the Year
- US Consumer Prices Surge in August Driven by Energy Costs
- August NFIB Survey Showed a Tough Environment for Small Businesses
- All Signs Point to a Weaker Labor Market in August
- Thoughts on GME and This Week in the Stock Market
- Record Home Price Levels Point to Strength in Post-Pandemic Economy
- The Stock Market Looks Overvalued, but It's Probably Not
- China GDP Growth Surpasses Expectations
- President-elect Joe Biden Introduces His "American Rescue Plan"
- Political Polarization Intensifies with Another Impeachment Along Party Lines
- Metal Demand Has a Bright Future in 2021 and Beyond
- What Happened to That US-China Trade Dispute?
- Civil Unrest, A Rising Threat to the 2021 Economy
- What's in the $900 Billion Relief Plan?
Inflation and Tight Financial Conditions Weigh on the German Consumer
August 29, 2023
German economic data continues to point in the same direction, down. The latest GfK Consumer Sentiment report finds that there has been no improvement in consumer sentiment in August and that trend will continue going into the last month of the quarter. The reading for August was slightly above July, up 0.6 pts to -24.5, but that gain will immediately dissipate with a -0.9 pt drop to -25.5. From the GfK commentary: "Since consumer sentiment is likely to remain at a low level in the coming months, the assumption that private consumption will not make a positive contribution to overall economic development this year and will rather be a burden on growth prospects in Germany is confirmed."
Some notable trends in the subindexes further outline the weakness of the German economy. The economic expectations index dropped -9.9 pts to the lowest value so far this year at -6.2. However, it’s still more than ten points above a year ago. Similarly, income expectations are worsening with a -6.4 pt decline to -11.5 in August. While the inflation situation has improved, it is still weighing on consumers. The propensity to buy has stagnated at a very low level overall, with no clear trend, since the summer of 2022 thanks to both high prices and tighter financial conditions. Today’s GfK data for August and September combined with the weak Ifo survey last week and the confirmation of stagnation in Q2 likely means that we’re set for a contraction in Q3 2023.