How Germany, France ended recessions
German Chancellor Angela Merkel speaks with French President Nicolas Sarkozy after a meeting of the Group of Eight in L'Aquila, in central Italy.
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Steve Chiotakis: Europe's two biggest economies crossed a very important threshold today. The one that separates recession and no recession. Both countries reported 0.3 percent economic growth in the last quarter. Reporter Brett Neely is in Berlin and he joins us this morning with the latest. Hi Brett.
Brett Neely: Morning Steve.
Chiotakis: So was this expected?
Neely: No not at all. Most economists were really surprised by the numbers. They weren't expecting growth to resume until sometime in the middle of next year. But there have been an number of positive reports in the past couple of weeks -- exports have been way up and business confidence is on the rise again too -- so it's not a complete surprise
Chiotakis: What happened Brett? How did things bounce back so quickly?
Neely: Well I'm sure German Chancellor Angela Merkel and French President Sarkozy are going to take as much credit as they can. Both countries put large stimulus plans into effect -- a lot of infrastructure spending, roads, bridges, that sort of thing. Both countries also did Cash for Clunkers, especially here in Germany, which was the first country to do that. And that was an enormously popular program. I mean, the German government wound up spending about $7 billion to help a lot of people buy new cars.
I mean the funny thing is, of course, is that earlier this year the U.S. and other countries were criticizing Germany for not spending enough on its stimulus program. But I guess today's numbers are probably going to end that debate.
Chiotakis: So is it time to party now, Brett? Time to break out the champagne?
Neely: Well if I were Chancellor Angela Merkel, I would definitely want something fizzy. She is running for reelection. The election is at the end of next month, and she's certainly going to say that today's data vindicates her cautious approach to the crisis. But the thing is, is that if I were a regular German I don't know if I would party because credit is still pretty tight, business bankruptcies are actually on the rise, and most economists -- admittedly the same people who thought that the economy was still going to shrink -- are saying that unemployment's probably going to rise until next year. So the real worry is -- like in the U.S. -- is that this will wind up being kind of a jobless recovery.
Chiotakis: All right. Reporter Brett Neely joining us from Berlin. Brett, thanks.
Neely: Thank you Steve.