The United States has just announced a 4% (annualised) growth for the second quarter, following a disastrous first quarter showing (finally revised, for the third time, at -2.1% instead of -2.9%). Though this sounds like good news, we should wait for the official revision of this 4% number that looks miraculous... We’ll get back to it.

In Europe, on the other hand, the trend is much clearer, going from broken hopes of weak growth to stagnation, and then to the first signs of recession. In Italy, the Matteo Renzi “miracle” is turning out to be another flop: the country is experiencing its second quarter of recession in a row, -0.1% and -0.2%. In reaction to those numbers the Minister of economy, Pier Carlo Padoan, acknowledged, in an August 6 interview with Il Sole 24 Ore newspaper, that Italy finds itself “in a very arduous going-out-of-recession phase, because this recession is very deep.”

As far as France is concerned, it is not officially in recession, but its growth horizon remains desperately flat. François Hollande has declared he was expecting “a stronger support for growth” from Germany, notably by investing more. Berlin’s response: “The declarations coming from Paris, which are of a very general nature, do not provide any reason for the German government to correct anything in its economic policies,” according to Christiane Wirtz, a spokesperson for the government. Another aggravating element for Paris, when compared to Rome, is that its public accounts are still far from that 3% deficit figure, and Brussels may start to lose some of its patience.

But the most worrisome number, also the most revealing, comes from Germany. According to the Federal Statistics Office, orders from German industries have fallen to a record low, mid-2014. After slumping by 1.6% in May, they fell by 3.2% in June. At the national level, demand is falling (-1.9%), which constitutes an advance indicator of a slowing economy. But, above all, orders from outside the country are falling considerably (-4.1%) and, especially, orders from the Euro zone, that have crumbled in June (-10.4%). This proves that the growth fundamentals (productive investments from businesses) are in the red in the Euro zone. Outside a few occasional jumps caused by consumption, itself financed by public debt, which France knows really well how to do, no real growth will be achieved... and the game is nearing its limits.

We are now seeing the German locomotive, the only source of growth in the Euro zone, being hurt. This reversal of industrial orders, both internally and abroad, shows that the engine of growth is broken. And, on the long term, this will only reactivate the debt and euro crises...

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