IS CUMBERLAND A RIVAL OF GEORGIA TECH?:

Brutal, in every sense: Is the European recovery over before it has really begun? (The Economist, Nov 12th 2004)

THE French, it seems, do not use the word “brutal” in quite the way the English do. Jean-Claude Trichet, the French president of the European Central Bank (ECB), reached for this arresting adjective earlier this week to describe the euro’s recent gains against the dollar—the single currency eventually reached a record price of $1.30 on Wednesday November 10th. But according to a translator, writing in the Financial Times, Mr Trichet’s comments were not as alarming as they sound. When the French describe a change as brutal, they mean it is sudden, not cruel or vicious.

But after seeing this week’s GDP numbers from the euro area, Mr Trichet may come to view the euro’s rise as both sudden and savage. The 12-nation block grew at an annual pace of just 1.2% in the third quarter, according to figures released on Friday, a substantial slowdown from the second quarter, when it grew by 2%, and the first, when it peaked at 2.8% (see chart). It seems the recovery in the euro area, which has been long awaited, may already be dearly departed.

Mr Trichet and other anxious observers will have to wait until later in the month to confirm which parts of the euro area’s giant economy are losing the most steam. But it is likely that both French consumers and German exporters, the euro area’s twin-stroke engine of growth in the first half of the year, have misfired since.

Buoyed by higher house prices and a consumer splurge, the French economy was looking quite sprightly in the spring. Indeed, at one point, it seemed as if the French were even outpacing their American rivals. Subsequent data revisions—downwards in France, upwards in America—dispelled that illusion. And figures for the third quarter have punctured French delusions of growth altogether. The French economy crawled along at an annual pace of just 0.4% between July and September.

The delusion didn't concern performance but their belief they were our rivals.

Posted by Orrin Judd at November 13, 2004 10:38 PM