News Blog Summary 1

In February, Germany's industrial output increased at at a rate greater than projections. This was the fourth consecutive month that this occurred. In addition, Germany's economy at an annualized rate of 3% in the first quarter. In February, output was expected to increase by 0.2% and instead, it increased by 0.4%. Due to increased industrial production and solid retail sales, Germany's expected GDP in the first quarter grew from 0.5% to 0.7%, a 2.8% annual rate. This rate is much improved from the 1.5% expected annual GDP based on fourth quarter projections.

Consumer confidence is the highest its been in the past seven years, showing that Germany has recovered nicely from the Global Crisis in 2008. People seem to be optimistic about the economy. The job market is also doing well, with the unemployment rate below 7%.

Although first quarter numbers have been solid, projections for the remaining three quarters have been lowered due to an expected decrease in productivity. Industrial activity is projected to be slow in the coming months.

Despite the latter, the better-than-expected growth in the February and the first quarter, Germany's economy is preforming very well. As a result of the increased industrial output and growing GDP, aggregate supply and demand will be impacted positively. Aggregate demand will increase as a result of the improving job market and lower unemployment rate and aggregate supply will continue to grow if output is still growing. Supply and demand will both increase, raising the quantity of goods and services along with the price of goods and services. The rise in prices will not decrease demand because if people are earning money with more jobs available, they will be willing to spend more. Overall, the overall growth of output will have an immense impact on the health of Germany's economy.

Although the entire world has been effected by the Global Crisis, Germany has recovered nicely and looks to be heading in the right direction. Germany is an economic superpower and has proven that it can adjust to tough economic times.

http://online.wsj.com/news/articles/SB10001424052702304640104579486691793344298