Showing posts with label Euro area disposable income. Show all posts
Showing posts with label Euro area disposable income. Show all posts

Saturday, November 10, 2012

10/11/2012: Euro area households feeling the pain?


Couple interesting charts from the Goldman Sachs research note on French consumption woes - link):


Euro area household disposable income is now under water in the Euro area steadily since 2008, which marks 5 years of sustained contraction. More interestingly, the chart shows abysmal performance of the RDI in Germany since roughly 2004.

The next chart maps gross savings rates for households - which are falling in the Euro area, just as disposable income is falling. Given the double dip recession, this suggests that tax hikes and cuts to income are now severe enough to knock households out of precautionary savings motive. And the latter would imply that households consumption is unlikely to rise even when income growth returns.