Related Topics
Economy , European Markets
     

Will Another “Great Depression” Start in Europe?

See these signs of “Europe’s sputtering economic engine”

by Bob Stokes
Updated: September 07, 2022

Many people are familiar with the Great Depression of the early 1930s, but most of them may not know that this economic calamity began in Europe before arriving in the U.S., as a past issue of our Global Market Perspective has noted.

In Germany, for instance, consider that real GDP fell 1% in 1929 after growing 8.2% in 1927 and 2.8% in 1928. Other economic indicators hit a peak as early as 1927.

Only time will tell if history repeats. Yet, here in 2022, we do know that troubling signs are developing in Europe's biggest economy.

First, look at this recession indicator from our August Global Market Perspective with the commentary below:

GermanyRecession

Companies in Germany are seeing "softer demand for their products amid a darker economic outlook." (Bloomberg, 7/4/22) Germany's GDP also stagnated in July. More importantly, the economy recorded a 0.5% drop in overseas sales while imports were up 2.7%, meaning that the country recorded its first trade deficit since 1991. While deficits themselves are not recessionary, the change in behavior is notable, and, in case you're wondering, 1991 was indeed a recession year.

Since this analysis published, an August 22 Reuters headline said:

German recession increasingly likely, Bundesbank says

Some of Germany's neighbors are likely already experiencing economic contractions -- like Estonia and Latvia. Other economies -- Austria, Belgium, Luxembourg and Portugal -- registered shrinking GDPs in Q2.

Getting back to Germany, here's more commentary and another chart from our August Global Market Perspective:

EuropesSputtering

The bottom graph on this chart shows the market capitalization of German companies as a percentage of worldwide market cap. Notice that it has been declining since its high point in 2008... The percentage has dipped relentlessly lower, falling to an all-time low of 1.92% just two weeks ago. Today, among Germany's largest four companies, only one ranks among the world's 100 largest.

Our just-published September Global Market Perspective provides more insights into global economies, including the U.S., Asian-Pacific and other parts of Europe.

Follow the link below to get the details so you can prepare for what may be just around the corner.

“A Textbook Ending for the Ages”

That's the title of one of the dozens of charts in our just-published September Global Market Perspective.

Discover which stock index (and country) right now -- plus get analysis of cryptocurrencies, crude oil, forex, gold, silver, global bonds and key stock indexes from around the globe in the 50-plus pages of the new Global Market Perspective.

Once reserved for only Elliott Wave International's institutional clients, the Global Market Perspective is now available to anyone who wants to tap into our timely insights into 50-plus global financial markets.

Just follow the link below to get started now.

Yen’s Surge to 3-Month Highs: Not in the “Fundamental” Playbook

The recent move in the US Dollar/Japanese Yen has shocked currency market participants far and wide: Now see what our analysis showed subscribers.

EXCLUSIVE

Shanghai Composite: Does the Rally Have Legs?

Chinese stocks have risen strongly off their October lows. With all the political turmoil in China, many are wondering if the rally is just a flash in the pan. Our Asian-Pacific Short Term Update editor, Chris Carolan, walks you through the Shanghai Composite's Elliott wave pattern to give you an unvarnished, objective answer.

EXCLUSIVE

2024 Presidential Race: 3 Dow Levels to Watch

With the midterms in the rearview mirror, let's look ahead to the 2024 presidential race. Polls have infamously missed the mark over the past few election cycles. Discover how you can use the stock market to anticipate the election outcome without polling a single person.