Wall Street Journal
December 13, 2010
Disaggregate. Feel somehow unsoothed by reports that total crime has fallen? Disaggregate. You might find that total crime is down because car thefts have dropped sharply while violent muggings are on the rise, but not as rapidly as car thefts have fallen. So it is reasonable to avoid a dark street in the evening. Feel financially pressed by the lack of a salary increase even though the overall consumer price index is stable? Disaggregate. You might find that the price of electronic goods bought by youngsters has dropped sharply while food and drug prices have risen, but not quite as much. So don't expect to feel any better off when you go to the supermarket.
So with euroland. Take a bit of satisfaction in the fact that the overall euro-zone economy is showing strength, and that this modest growth seems set to continue in 2011, at a rate of 1.4% say economists at Citigroup Global Markets, or 1.9% if you prefer the crystal ball gazers at Goldman Sachs, who believe "The recovery is progressing nicely for the euro zone as a whole." To which Jean-Claude Trichet, head of the European Central Bank, adds that the overall euro-zone budget deficit comes to 6.3% of its GDP, compared to what he says is 11.3% in the U.S. and 9.6% in Japan. Why worry?
Disaggregate the figures for the euro zone and you find a far more significant story. Germany is growing and Spain is not, France is doing far better than Greece and Portugal but not as well as Germany, unemployment in Germany is 25% lower than in the euro zone as a whole, and half the rate in Spain. As for Mr. Trichet's boast about the low euro-zone deficit, take it with a pinch of disaggregation, lest you forget the double-digit deficits that brought Greece and Ireland down.
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