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Source: @FGoria
The importance of investment uplift is hard to underestimate in the case of the euro area, as the next chart clearly illustrates:
Source: @FGoria
And this translates into depressed Domestic Demand (C+G+I bit of the national accounts):
Source: @FGoria
The gap between U.S. and the euro area is understandable. But the gap between Japan and the euro area is truly shocking, once one considers the state of the Japanese economy and the sheer magnitude of monetary stimulus that Japan had to deploy to push its Domestic Demand up from 2011.
In simple terms, the above charts show some revival in the euro area fortunes. In more complex terms, one has to wonder what this revival hinges on. In my opinion, we are seeing a bounce in credit creation that is not sustainable given the state of the global economy (with global trade flows remaining weak) and the conditions of households across the euro area (with domestic consumption and household investment still weak).
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