The
tightening credit conditions in the Eurozone are taking their toll on the consumer. The unemployment rate is rising and is likely to keep rising further, given the messy labor laws in many Eurozone nations (it takes much longer to lay off employees than it does in the US for example).
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| Unemployment rate (source: Capital Economics) |
At the same time inflation is staying stubbornly high, putting the Eurozone misery index (combining unemployment and inflation) at new highs.
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| Eurozone misery index (Bloomberg) |
Except for
Germany, consumer confidence in a number of Eurozone nations is at or below the lows seen after the 2008 financial crisis. Netherlands' decline in consumer sentiment is particularly painful.
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| Consumer confidence by country (source: Capital Economics) |
Lending to households is being shut off across Europe, except for Germany of course.
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| Loans to Eurozone households (source: Capital Economics) |
With this economic backdrop that Draghi calls "
signs of stabilization", the Eurozone households' spending is declining into a "double-dip". The Eurozone consumer recession is now in full swing.
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| Eurozone household spending (source: Capital Economics) |
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