July 30, 2014
WHICH IT HAS IN COMMON WITH THE RIGHT:
Europe Won't Admit It's Spiraling Into Deflation (Mark Gilbert, 7/29/14, Bloomberg View)
Back in March, European Central Bank Governing Council member Jens Weidmann said that the "deceleration of prices" seen in the euro region was a temporary phenomenon caused by a drop in energy and food prices. What sounded unlikely then now looks myopic, misinterpreted or disingenuous, depending on how charitable you're feeling.Figures today show Spanish consumer prices dropped at an annual pace of 0.3 percent this month. Inflation there has been below 1 percent for a year. If the technical definition of a recession is two consecutive quarters of shrinking gross domestic product, it seems fair to suggest that a further slowdown in Spanish prices next month would put the country in deflation.Moreover, prices are dropping even though growth figures also released today show the economy expanded by 0.6 percent in the second quarter, beating the 0.5 percent anticipated by the Spanish central bank. All of which bodes badly for the ECB's efforts to avert deflation in the euro area.
Posted by Orrin Judd at July 30, 2014 7:00 PM