It hasn’t been a great year for European economies. Italy has slide back into a recession. German GDP contracted in the second quarter, and German finance minister Wolfgang Schaeuble reportedly said on Thursday that the Eurozone’s strongest economy is likely to miss its 1.8 percent growth estimate this year. Across the Eurozone, zero growth was shown in the second quarter, and recent manufacturing data indicates that the third quarter may not be much better.
Still, these bad numbers haven’t been too damaging for global risk assets—after all, they have clearly increased the European Central Bank’s appetite to stimulate the economy. But there may be a limit to how bad Europe can get before bad news becomes bad news once again.
In fact, serious concerns about the Eurozone economy could be one reason why stocks didn’t react too enthusiastically to the ECB’s surprise Thursday announcement that it would cut rates and commence asset purchases.
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