France reported last week that the gross domestic product in the second quarter fell flat after a 0.9 percent gain in the first quarter. Aside from concern over major banks in France that may be overextended with holdings of Greek, Spanish and Italian debt, consumers in Germany's largest trading partner appear to be cutting back on spending.
The pattern lately is this: Household spending in consumer-oriented economies, like the United States and France, shrinks. In response, governments, including the United States and France, cut back on their spending. It's as if someone was begging for deflation to march in and bite the hand that feeds it, which is to say the hand that isn't feeding growth is setting the table for a backslide.
Japan on Monday chimed in with figures that were less disappointing than expected, given the earthquake and tsunami that struck the nation on March 11.
The disaster put the brakes on an otherwise healthy -- or healthy enough -- automobile industry that is front and center of Japan's export-oriented economy.
Economic output fell 0.3 percent in Japan in the second quarter, but the earthquake may prove to be a problem that is resolved before the global economy comes around. When Japan is back on its feet, a large portion of the consumer base in Europe and the United States will still be unemployed. European and U.S. unemployment rates have held stubbornly high near 9 percent and show no signs of improvement of late.
The U.S. Federal Reserve last week, The New York Times pointed out, gave consumers a green light on borrowing, all but promising for the next year and a half that interest rates would remain at historic lows.
But consumers are not ready to take up the invitation. In the first place, "I don't think lenders are going to be interested in extending a lot of debt in this environment," said Mark Zandi, chief economist of Moody's Analytics.
Lenders are tight, but so are borrowers. "Nor do I think households are going to be interested in taking on a lot of debt," Zandi said.
If psychologists were not hard at work at the start of the year, they are now. Consumer confidence is now lower than it was in November 2008, the Times reported, and last week's market debacle has barely even sunk in. That first downturn three years ago was debilitating. Now it is utterly exhausting.
In international markets Monday, the Nikkei 225 index in Japan rose 1.37 percent and the Shanghai composite index in China was up 1.3 percent. The Hang Seng index in Hong Kong surged 3.26 percent and the Sensex in India dropped 1.29 percent.
The S&P/ASX 200 index in Australia rose 2.64 percent.
In midday trading in Europe, the FTSE 100 in Britain gained 0.7 percent while the DAX 30 in Germany rose 0.68 percent. The CAC 40 in France was up 0.61 percent and the Stoxx Europe 600 rose 0.05 percent.
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