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Lombardi Financial, a division of Lombardi Publishing Corporation (www.LombardiPublishing.com), a 28-year-old consumer publisher that has served over one million customers in 141 countries, is warning that an economic slowdown in the eurozone could have serious ramifications on the fragile economic recovery taking place in the United States.“In early August, it was reported that Italy, the third-largest economy in the eurozone, had fallen back into recession,” says economist and lead contributor Michael Lombardi. “Now Germany, the area’s largest economy, is pulling back and France, the second-biggest economy in the eurozone, is also in a precarious position.”
Lombardi explains that in the second quarter of 2014, Germany witnessed a decline in its gross domestic product (GDP), the first decline in the country’s GDP since the first quarter of 2013. In August, the ZEW Indicator of Economic Sentiment, a survey on the health of the German economy, posted a massive decline; the index collapsed 18.5 points and currently sits at 8.6 points. This indicator has been declining for eight consecutive months and is now at its lowest level since 2012. (Source: “ZEW Indicator of Economic Sentiment - Economic Expectations Decline Significantly,” Centre for European Economic Research web site, August 12, 2014; www.zew.de/en/press/2709/zew-indicator-of-economic-sentiment---economic-expectations-decline-significantly.)
France, the second-biggest economy in the eurozone, is also in a precarious position. And a recession may not be too far away; in 2013, France’s GDP rang in at just 0.4%, and during the first half of 2014, it came in at zero. In addition to a stagnant economy, France faces record unemployment and a growing deficit. On top of that, Prime Minister Manuel Valls warned that the autumn months would continue to be difficult. (Source: “In Q2 2014, French GDP held steady,” France National Institute of Statistics and Economic Studies web site, August 14, 2014; www.insee.fr/en/themes/info-rapide.asp?id=26&date=20140814.)
“The economic slowdown in the eurozone could have serious ramifications for the U.S. economy,” Lombardi observes. “It’s important to remember that approximately 40% of the public companies that make up the S&P 500 derive sales from Europe. If the eurozone faces an economic slowdown—and it is—the corporate earnings of American companies will suffer.”
“America won’t be able to skirt the consequences of an economic slowdown in the eurozone simply because the U.S. economy itself remains weak. After all, it’s been the lethargic U.S. economy that has necessitated zero interest rates for six years, and there is serious doubt as to whether or not the U.S. economy can sustain higher rates,” Lombardi concludes. “With that in mind, it’s difficult to imagine the U.S. could survive a global economic slowdown unscathed.”
Founded in 1986, Lombardi Publishing Corporation, which has served over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more information on Lombardi Publishing Corporation, visit www.LombardiPublishing.com.
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Organization: Lombardi Publishing Corporation
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