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Is Ireland the Poster Child of Growth?

by Rebecca Wilder

Is Ireland the Poster Child of Growth?

I wanted to familiarize myself with the economic statistics in Ireland, so I thought that I’d share my findings with you all. Many politicians refer to Ireland as the poster child of austerity – according to the contentious thesis of expansionary austerity (a review from the IMF .pdf here), is it therefore the poster child of growth? In this post, I review the cyclical data and find that the Irish economy is quite divergent with optimism only evident in the industrial and export sectors. In aggregate, there’s really been no momentum at all.
On the one hand, the industrial sector seems to be holding in okay, with the manufacturing PMIs remaining above 50 since March 2012. Furthermore, international saving, or the current account, moved from a 6% of GDP deficit in Q3 2008 to a small surplus in the fourth quarter of 2011 (4-qtr moving average). However, the current account has been deteriorating slightly at the margin, beginning in the second half of 2011.

Note: Except where noted in the legend, all charts below relate to the Irish economy.



In contrast, the consumer sector is suffering quite explicitly. After yesterday’s revisions to previous months, we now see the harmonized unemployment hovering near its peak rate, 14.6% in May vs. 14.8% peak (in the chart below, the red line maps the pre-revised unemployment rates). Consumer confidence is very low, which implies that retail sales could tumble a bit in coming months. Furthermore, price inflation lost some steam, although it remains above the deflationary period that ended in 2010 by the headline measure. Core inflation dropped off in the last couple of months to just 0.4% Y/Y in May. Finally, for all of the optimism on Ireland, Q4 2011 GNP and GDP are just 1% and 0.7%, respectively, higher than their 2010 lows.




It’s probably too early to fully discount the orthodox expansionary austerity thesis – but at the minimum, it does appear as if any economic momentum has been gained primarily through global trade, and that sector is struggling. In all, I’d say that Ireland looks more economically depressed than ambitious and not the poster child of growth.

Rebecca Wilder


crossposted with The Wilder View…Economonitors

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Rumours of "Green Shoots" are Exaggerated: Illinois

After my previous posts on Georgia, it seems only fair to note the bank closings in Illinois today.

There have been 13 bank closings posted (as of right now, about 6:50pm) in the state of Illinois since last March. That alone is significant—but, even more interesting, six of them occurred today. This exceeds the previous record for a state, Georgia’s five last week.

Three (in Elizabeth, Oregon, and Danville) are in the NW part of the state. The other three are located near Chicago (Worth, in Cook County), Urbana (Clinton), and Springfield (Winchester).

Only two of those cities (Worth and Danville) are in the Top 200 cities by size in the state, so it’s difficult not to suspect that their location had a lot to do with the closing of at least four of the banks.

Again, the same as the Georgia question, why Illinois? And, most especially, given the past two weeks, why are there multiple state closings now?

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Noted for the Record, Failed Bank edition

With today’s (well, yesterday’s) five closings, the total of failings of U.S. banks since March of last year to 69.

Of those, slightly more than 20% (14) are from the state of Georgia. Excepting the much larger California, there have been more failings in Georgia than in any two other states combined.

Also as a matter of record, the 69 failings since last March constitute more than 70% of the 97 failings since October of 2000. So, in round numbers, 15% of the time accounts for 70% of the failings.

Bubbles beget bubbles. Anyone find anything more to it than that?

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