Sunday, March 6, 2011

Growth Stalls, Prices Rise Along Troubled Edge of Euro-Zone

This morning’s economic readings out of Europe don’t make for great news. In the troubled peripheral countries, it looks like stagflation is making something of a mild comeback.

Jobless rates are already high, but now industrial production is dropping more than expected and prices are jumping. Might be time to get the brown suits, disco balls and platform shoes out of the attic.

Euro-zone industrial production fell in September by the largest margin since March 2009, according to Dow Jones. Even mighty Germany showed a decline, undercutting the view that European’s biggest economy was sailing briskly out of the recession.

Eurostat said industrial production dropped 0.9% from August, well off expectations for a 0.3% gain. The month’s reading was 5.2% higher than one year ago.

Among fiscally troubled countries, the numbers painted a dark picture. Greek industrial production dropped 5.4%, Portugal 4.7%. Figures for Ireland aren’t available until next month.

At the same time, prices are on the rise in troubled countries. Spain’s consumer price index rose to 2.3% for the year in October even as the country said growth had ground to halt. Portugal saw CPI also rise to 2.3% on the year while Ireland’s CPI measure rose 0.7% last month – the biggest one-month gain in almost three years.

The combination of slow growth or recession combined with high jobless rates and inflation is an economic nightmare that for some reason spurs unbelievably bad fashion choices. Couture Torture up ahead?

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