We appear to have entered a period of economic distress in Europe. The euro zone economy contracted by 0.1% on a quarterly basis, with growth of 0.1% across the European Union. Meanwhile, the US economy appears to be moving very quickly, with growth reaching 4.9% in the third quarter. But according to economist Edin Mujacik, we should take this number with a grain of salt. “The American way of reporting distorts growth a little bit.”
“If you want to compare them, you actually have to divide the American number by four.”
“It’s not overflowing, growth is clearly slowing down,” Mojacik said of the very small European growth numbers in the third quarter. Looking at the main indicators, the picture shows that the economic situation will not improve much in the coming months and perhaps quarters. However, the economist was able to find a small bright spot: “It makes fighting inflation a little easier, because this will slow down inflation in the future.”
Divide the growth rate in the United States by four
Mojacik knows that the growth figures come from a preliminary estimate by the statistics agency Eurostat and are based on little data. The data is based on only eleven of the twenty eurozone countries. The full figures will be published on November 14, and we’ll find out exactly where the lack of growth is coming from.
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In the United States, the economy reportedly grew by 4.9 percent in the third quarter. There seems to be a shockingly large difference with the European situation, but according to Mojacik, we should take this American figure with a grain of salt. “The American way of reporting distorts growth a little bit and raises it a little bit.”
He explains that in America they take growth on a quarterly basis and then calculate what growth will be for the entire year if growth remains the same in the coming quarters. “This means that if you want to compare them, you actually have to divide the American number by four.”
