No. of Recommendations: 13

European Economy Shrank for a Second Quarter
New York Times, November 15, 2012

FRANKFURT — The European economy shrank for a second quarter in a row, according to official data released Thursday, fulfilling a common definition of recession and signaling that the region still faces a long road to recovery.

Gross domestic product in the euro zone fell 0.1 percent in the three months through September compared to the previous quarter, according to Eurostat, the European Union statistics agency. The euro zone economy improved slightly from the second quarter, when it contracted by 0.2 percent. But it was the fourth quarter in a row of zero growth or worse. ...

Germany grew 0.2 percent in the third quarter, slowing from a rate of 0.3 percent in the second quarter. But data on exports, domestic demand and business sentiment indicate that growth in Germany, the euro zone’s largest economy, will slow in future quarters because of falling demand from its neighbors, economists said. ...

...with unemployment in the euro area at 11.6 percent, and nearly 26 million people out of work, few would dispute that the region is in a deep downturn.

Leading indicators suggest that the euro zone recession will broaden and deepen in the current fourth quarter,” said Martin van Vliet, an economist at ING Bank.
[end quote]

Europe is already in recession. The 4Q leading indicators are down. Germany, which is expected to underwrite the rescue of insolvent countries, is expected to slow further from its already slow growth rate.

A slowing Europe will be a drag on U.S. exports. This trend is negative for the markets.

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