Germany Retail Sales Unexpectedly Collapse the Most in Three Decades

August 1, 2022

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12:34 pm

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Retail Sales in Germany decreased 1.60 percent in June of 2022 over the previous month. https://t.co/NiPiFizyRy pic.twitter.com/jTAWPXdFHX

— Simply Investor (@InvestorSimply) August 1, 2022

Reuters reports German Retail Sales Post Biggest Year-On-Year Slump Since 1994.

Key Points

German retailers ended the first half of 2022 with the sharpest year-on-year sales drop in nearly three decades, as inflation, the Ukraine war and the coronavirus pandemic take their toll, data showed on Monday.
Retail sales in June decreased 8.8% in real terms compared with the same month last year, the biggest drop since the time series began in 1994, said the Federal Statistical Office.
Analysts polled by Reuters had predicted a drop of 8.0%.
Retail sales also unexpectedly fell compared with the month before: June retail sales fell 1.6% in real terms, versus analysts’ predictions of a 0.2% increase in a Reuters poll.

Trade Surplus Gone

#Germany is failing as an economic powerhouse. You all know my view on this. Apart from E-Vehicles they need to pivot quickly. #France and #Italy better placed with Luxury Goods and tourism. @Halsrethink @PaulGambles2 https://t.co/yfh1kQlE2D

— Jonathan Urlich (@CapitalJon) July 31, 2022

What About European Natural Gas?

The terrifying part of the recent spike in European #NaturalGas prices is the timing. Mid-summer!

I don’t see how we ever get to the above-potential #GDPgrowth forecasts of the EU, IMF, and other economists with rationing coming. pic.twitter.com/5Rzr3PlcdS

— jeroen blokland (@jsblokland) July 30, 2022

Short the Euro?

Reasons to short the Euro
1. The Euro zone is going into recession
2. Italian politics makes a bad situation worse
3. Putin has some tricks up his sleeve for winter
4. NO ONE BELIEVES EURO FALLS BELOW PARITY
5. Speculative FX positioning (black) is flat Euros pic.twitter.com/zkDbaoAO1g

— Robin Brooks (@robin_j_brooks) July 30, 2022

ECB Rate Hikes?

Another way of looking at what is priced in Euro is hikes priced for the ECB (blue) vs the Fed (black). Markets are still pricing an almost 200 bps hiking cycle for the ECB. That is incompatible with markets pricing recession, so it’s unlikely that EUR/$ is pricing recession… pic.twitter.com/9ukJDxHqyK

— Robin Brooks (@robin_j_brooks) July 31, 2022

The Euro is 57.6 percent of the US dollar index. If the Euro continues to tank, the US dollar will rally.

People still debate a US recession. Europe is unmistakable.

And in case you missed it, Hello EU: A Eurosceptic, Hard Right, Italian Government is Coming in September

This post originated at MishTalk.Com.

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57 Comments

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FromBrussels2

1 year ago

…..Germany is a textbook example of a fn masochist, armtwisted into inflicting pain on itself by our ‘frends’ at the other side of the pond ….

JackWebb

1 year ago

Reply to FromBrussels2

Germany’s insanity is not our fault, any more than it was in 1914 or 1942.

Six000mileyear

1 year ago

The trade surplus topped out in 2015, and was rolling over before COVID hit. The COVID rebound brought the trade surplus to the Pre-COVID trajectory. So no one should be surprised at economic reports to the downside.

8dots

1 year ago

The death spiral after the black plague 1665. In most kingdoms those who survived became serfs under harsher conditions. In England the king and the aristocrats had less power to bend people will. Demand for labor gave power to the people, to trade, mercantilism and slavery.

Doug78

1 year ago

Reply to 8dots

You got it wrong in the opposite direction. Serfs in Western Europe gained more freedom and bargaining power. What you did get right is that the same plague caused the serfs in Russia to lose freedoms as the nobles were able to tie them more tightly to the land so much so that by the 1700’s wealth in Russia was measured not by the gold you had but by the number of serfs you owned.

Dutoit

1 year ago

Reply to 8dots

The Black Death plague was between 1347 and 1352. There is a very nice novel by Kim Stanley Robinson : “The Years of Rice and Salt” : “The novel explores how world history might have been different if the Black Death plague had killed 99 percent of Europe’s population, instead of a third as it did in reality”.

Scooot

1 year ago

Reply to Dutoit

There was the Great Plague of London 1665 to 1666 (bubonic) the Fire in 1666 was said to have helped kill it off.

JackWebb

1 year ago

Reply to 8dots

I have decided to embrace your free-association as a source of entertainment. We all need the laughs now that the comedians have been censored. LOL

Sunriver

1 year ago

$1.18 for a Hershey bar (1.55 oz) at the ‘Most inexpensive Grocery Store’ in Boise Idaho (Most stores have the price at $1.50).

I wonder what that same candy bar is in Germany? $2.50?

We’re screwed.

MPO45

1 year ago

Reply to Sunriver

European chocolate is always more expensive because it uses more cocoa. American chocolate is filled with sugar, like almost all american process foods.

link to tastingtable.com

Doug78

1 year ago

Reply to MPO45

You can get Mars bars and Snickers in France at about a 1.20 euro a piece.

FromBrussels2

1 year ago

Reply to Doug78

Mars bars….I like them….5 for 3 euro here in Belgium….

JackWebb

1 year ago

Reply to MPO45

You don’t spend much time in the baking aisle at the grocery store, do you?

Doug78

1 year ago

Reply to JackWebb

I buy succulent pastries of all sophisticated and exotic types that one can get in France but sometimes I hanker for an American icon like a Mars bar.

Captain Ahab

1 year ago

Reply to MPO45

Gotta wonder about those rankings: M&M in #10. Hersey in #3. Willa Wonka is nowhere to be seen.

Lisa_Hooker

1 year ago

Reply to Sunriver

A while ago the Mars Bar was $0.10.

Occasionally it was worth it.

Pretty much all the other chocolate bars were $0.05, including Hershey with and without almonds.

Even a Chunky was $0.05.

I really miss the Forever Yours, also $0.05.

Times have changed.

Billy

1 year ago

Now’s the time to think about vacationing in Europe.

Lisa_Hooker

1 year ago

Reply to Billy

Sure it is, because I find wearing a mask so relaxing.

Doug78

1 year ago

It should not be a surprise for anyone that German consumer spending is down when you take into account that what has been happening for the last five months. The environment is hardly one in which one would confident enough to blow all your paycheck and borrow heavily. The theme is that hard times are coming and you better pack some money away so obviously the economy takes a big hit.

I wouldn’t count out Germany either. They have a long history of rebounding very quickly from economic hardships.

KidHorn

1 year ago

Reply to Doug78

If Germany goes down, Europe will follow and if Europe goes down, the US will follow. Who will the US have as allies if Europe goes under? Canada, Australia, Japan, and South Korea. Japan, Australia and South Korea will ally with China for their own survival. It will be game over for the US. We’ll be on an island with Canada. The BRICS will have won. The only way out is to make peace with Russia.

MPO45

1 year ago

Reply to KidHorn

Wrong. China is in a demographic death spiral, a lot faster than what has been reported. India is the new China with regards to future manufacturing and growth. China is done. Aside from Japan, Russia has the worst aging demographics. They couldn’t even take on Ukraine for goodness sake. It won’t surprise me at all if China invades and takes over Russia over the next decade or two for the resources but China has been making strides into Africa, a continent with plenty of young hard workers to exploit because they will need that labor, the whole world will.

link to project-syndicate.org

Mish

1 year ago

Reply to MPO45

Death Spiral China is Correct

Dutoit

1 year ago

Reply to MPO45

If the forecasts about climate change and decreases of natural resources become true, countries with a “demographic death spiral” will be better, because the population will have to be reduced anyway (divided by 2, 3 or more ?).

MPO45

1 year ago

Reply to Dutoit

You are leaving out the part where the strong prey on the weak. Russia has massive land rich with resources but if there is no one there to protect it or simply occupy the land then it will be up for grabs.

People will migrate like swarms of locusts when the resources start to deplete. That’s been happening for the last 12,000 years and it will continue to do so. You may be able to start seeing that in real time in the US when the western US runs out of water. over the next decade. Salt Lake, Lake Mead, Colorado River all being drained at rapid pace.

link to salon.com

I suspect people will flock to areas with plentiful water (rivers, lakes, etc.).

MPO45

1 year ago

Reply to Dutoit

link to salon.com

Dutoit

1 year ago

Reply to MPO45

What I see in the US now is very dry zones (with many devastating fires), and other places with devastating floods. Would not it be wise to cut the military budget and use one half of it to be able to take water from flood areas to dry ones (with canals, tunnels) ?

Captain Ahab

1 year ago

Reply to Dutoit

It would be wiser to make watering lawns and washing cars illegal.

Maximus_Minimus

1 year ago

Reply to MPO45

Oh my god, an almost barren planet. Give animals a chance. /sarc

Captain Ahab

1 year ago

Reply to MPO45

Is this the same China that had a one-child policy from 1980 to 2015 to curb the population growth. Frankly, I wouldn’t be surprised if China’s next focus is on superiority, selecting and DNA splicing for intelligence, health, etc. Demographics is not just about the number of people…

JRM

1 year ago

Reply to MPO45

Wait China is a death spiral!!!

How they going to invade Russia in the next decade or two???

This completely contradicts your statement!!!

US and its allies lost in Afghanistan and we had more troops in country than Russia has deployed into Ukraine.. Check the size of Ukraine compared to Afghanistan and Iraq…

US should have won the war outright in both countries, but we didn’t!!!

Russia is winning in Ukraine, contrary to West MSM/Intel propaganda machine!!!

Doug78

1 year ago

Reply to KidHorn

Brazil is going to take over the world? Russia has a very hard time with just Ukraine. India is fine but hates China who hates India, China has lockdown after lockdown and every time they lose more business and clients for their goods and South Africa is not going anywhere either. They could add Iran who is the perennial basket case and Pakistan which is close behind. Turkey is a possible candidate as well as Saudi Arabia but all together without China they all add up to about 7% of world GDP. With China it goes way up to about 23% but that just means that the other Brics will be looking to China essentially for only providing money to the other Brics. Anyway Russia, Turkey and Iran do not see eye to eye over Syria and each country sees Syria as key to their security and each have different needs that can’t be filled by the other actors so what we have is a genuine Mexican standoff. Now that is a perfect example of international balance of power politics.

Captain Ahab

1 year ago

Reply to Doug78

And you’d be right except for ‘my enemy’s enemy is my friend.’ To wit, except for the 1936 Anti-Comintern Pact, Japan and Germany had nothing (or very little) in common , and minimal prior relationship before WW2. They came together because of hatred of Roosevelt and the US.

Doug78

1 year ago

Reply to Captain Ahab

Yes they did but because of geography they couldn’t help each other. Except for Russia-China the Brics are all separated from each other as opposed to the EU for example where they are all together which facilitates trade and defence. The ‘my enemy’s enemy is my friend’ is not a way to build an alliance that lasts.

Captain Ahab

1 year ago

Reply to Doug78

That Russia and China dominate Asia is enough for the rest of Asia to fall to them (India, Pakistan, Mongolia, Kazakhstan, Iraq, Iran, Turkey, Syria…) You might also add in Eastern Europe, Middle East, and Africa. In terms of South America, there is also a critical mass of marginally friendly/unfriendly countries. As for trade, China’s Silk Road is already well underway.

The litmus test was how many countries avoided the trade restrictions on Russia. The price of hegemony and colonialism?

Doug78

1 year ago

Reply to Captain Ahab

“That Russia and China dominate Asia is enough for the rest of Asia to fall to them”.

Proximity is not enough and even a hindrance since neighbors often have territorial disputes going back generations. Just about every country you mentioned are mutually antagonistic. Europe seems to have broken that pattern by uniting. The others have not.

KidHorn

1 year ago

Germany has been supporting Europe for decades. If they go down, no chance Italy and France saves them. Might be the beginning of the end of the EU.

prumbly

1 year ago

Reply to KidHorn

Actually the rest of the EU has been supporting Germany for years. As a huge industrial producer, Germany needs its client states as customers for its products.

KidHorn

1 year ago

Reply to prumbly

I guess you think the US has been supporting China too. Going heavily into debt supports your lenders. Not the other way around.

Doug78

1 year ago

Reply to prumbly

It’s called symbiosis. Economics is by far the weirdest phenomenon on Earth and is more complicated than quantum mechanics. It is akin to biology in its uncertainty but even more so.

Christoball

1 year ago

Reply to prumbly

Germany probably has a department store credit type lending arrangement whereby many loans to other EU citizens are redeemable for German goods and services only.

JackWebb

1 year ago

Reply to Christoball

Germany tried that near the outset of WW2. It was called the askimark. Look it up.

Winn

1 year ago

Reply to prumbly

It means Germany is the indicator of economy of Europe. Now the whole Europe is gone.

Captain Ahab

1 year ago

Reply to KidHorn

Might be = will be. Frankly, I’m surprised the EU lasted this long.

FromBrussels2

1 year ago

Reply to Captain Ahab

. the EU with its insane euro has merely been a fair weather circus, initially creating a economic bonanza for a while….the big financial crisis in 2008 was sorted out with moneyprinting , then came Corona leading to more printing , now the EU has killed itself with sanctions against Russia , no printing will sort this one out , inflation is already rampant, vaccination no longer works(it never did), winter will bring outright disaster upon us and hopefully the end of the brainless EU institute with all its fn utterly worthless parasites !

Karlmarx

1 year ago

As to Maslow, needs change over time. Louis XIIII did not “need” a TV. Today, even people living in public housing need one.

As to people debating a US recession, this is akin to saying people are still debating the The Copernican system. Only in Orwell’s Oceania, where The Party decides what words mean, are we not in a recession.

Maximus_Minimus

1 year ago

Reply to Karlmarx

In the election year, supposedly you can’t have a recesion because someone at the top, whose image is carefully crafted, can rule the tides.

The infantilism in that story underlies the political system.

PapaDave

1 year ago

Food, water, energy, shelter.

Once those basics needs are satisfied, people can spend on wants.

If the cost of needs has skyrocketed (for example, energy) then there is less money left over for wants. And psychologically, people will pull back further, fearing even higher prices for basic needs going forward.

Zardoz

1 year ago

Reply to PapaDave

Some people will, but most don’t realize that it is possible for them personally to starve to death.

RonJ

1 year ago

Reply to Zardoz

Especially with Dutch and other farmers being put out of business because- climate change.

Captain Ahab

1 year ago

Reply to PapaDave

Energy is NOT a need in the Maslow model, but maybe it is in your portfolio. Energy becomes important through needs like shelter…

FYI: One need is for food; the want is a spaghetti and meatballs TV dinner. That is, an individual’s specific satisfier of his/her/hem need.

Maybe you mean higher-level needs, as Maslow suggested?

PapaDave

1 year ago

Reply to Captain Ahab

Lol! I don’t think Maslow mentioned very many specifics. Like air to breathe. Perhaps you consider air a want?

Just because Maslow didn’t specifically mention energy, does not exclude it from being a basic need for humans.

If you want to test that out, I suggest you stop using energy (like electricity in your home).

As energy costs keep rising, particularly in Europe, people will cut back on spending elsewhere.

Captain Ahab

1 year ago

Reply to PapaDave

FYI, at the bottom of Maslow’s Needs Hierarchy are Physiological needs (the basic essentials for life):

“Air, Heat, Clothes, Hygiene, Light, Water, Urination, Food, Excretion, Shelter, Sleep, Sexual intercourse.”

The point is, this is not about ‘energy’ per se, but what we do with energy that creates demand for it. I don’t need 5 gallons of gas for its own sake. I might use it to power a generator to make light, run pumps, a car, etc. to meet other needs. The greater my need to pump water, for example, the more I will pay for the gas… until my other needs intervene

PapaDave

1 year ago

Reply to Captain Ahab

Funny. Almost everything in that list requires energy. Or didn’t you notice?

MPO45

1 year ago

Reply to Captain Ahab

In my biology class, food = energy. Technically, it’s chemical energy but whatever.

Zardoz

1 year ago

Reply to Captain Ahab

I’ll just chill here at absolute zero then, Maslow….

MPO45

1 year ago

Reply to PapaDave

I guess that’s why bill gates was buying up farmland everywhere. The rich have their consultants to tell them what’s coming and where to profit. ADM shares it is today.

Lisa_Hooker

1 year ago

Reply to PapaDave

Water first, then shelter, then energy if it’s cold or food if it’s hot outside.

Germany Retail Sales Unexpectedly Collapse the Most in Three Decades

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