Tag: economy

German Economy Unravelling: Hospitality Crisis, Jobs Vanishing & Industrial Decline

While the federal government is desperately waiting for the start of the multi-billion euro debt package, the real economy is burrowing ever deeper into the ground. The numbers from the hospitality sector speak a clear language: things continue to go downhill.

On Monday, Chancellor Friedrich Merz visited the six-day congress of the trade union IG BCE (Industrial Union for Mining, Chemicals, Energy). There he emphasised the high importance of social partnership between workers, employers and politics and assured the union that he was well aware of the increasingly difficult situation of many people in the country.

In these days Merz would have done better to visit the German hospitality industry. There, without the glamorous distraction of a functionary congress, he could have seen first-hand the reality of the German economy: The interest in uplifting speeches by the Chancellor among restaurateurs, hoteliers and caterers is likely vanishingly small — business is simply too bad.

Cold shower in the holiday season

The Statistisches Bundesamt (Destatis) delivered catastrophic figures for August for the entire German hospitality industry, i.e., both gastronomy and hotels: Even in the most important vacation month, restaurants, hotels, caterers and snack bars lost a real turnover volume of 3.5 per cent compared with the previous year. Nominally there was still a minus of 0.6 per cent in the overall balance. Also compared with the previous month, July, the hospitality sector lost real turnover of 1.4 per cent.

Such a poor development, of all times in the high-volume holiday months, is a fatal proof that nothing seems to be running smoothly anymore in the German economy — exactly now you would have had to cash in. Here, the until now weak year with a minus of about 4 per cent at least should have offered a small glimmer of hope. Pfft. The summer months turned into a disaster. 

Consumers are suffering under the political framework conditions, the high energy prices, inflation and the labour market, which has long since entered rough seas.

Those who take a look into the engine room of the German economy will quickly find the causes for this crisis. It is the expression of an economic disaster that remains insufficiently described in media and politics. The industrial core of the German economy could not permanently withstand the shockwaves of the Brussels eco-regulators and the gnawing attacks of interest-driven NGOs such as the Deutsche Umwelthilfe.

General decline 

And so it came to pass, as it had to. Starting from its best year 2018, German industry across sectors lost a production volume of almost 25 per cent — an indescribable exodus of firms abroad, countless insolvencies: an economic knockout, delivered by a self-inflicted uppercut. 

Large parts of the economy hang on this industrial foundation as if on an umbilical cord — once it is severed, the service providers, the suppliers, the hospitality industry, tourism plunge too. Roughly 1.3 million jobs in the private sector have disappeared to date.

The German economy is in a veritable clearance sale — in a spiral of deindustrialisation. From July 2024 to today, more than 270,000 jobs have been lost in the manufacturing industry, the metal, electrical and steel industries. At the same time, the public administration expanded by almost 50,000 new jobs this year.

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Carney urges Canadians to ‘make sacrifices’ ahead of record deficit

Prime Minister Mark Carney forewarned future challenges to Canada’s economy, which he suggested was performing “reasonably well” in a pre-budget address to the nation.

Carney warned on October 22 at the University of Ottawa that economic transformation would require “some sacrifices” and time, a message tied to the November 4 budget.

“Our government will work relentlessly to cut waste and drive efficiencies,” he claimed, “and when we have to make difficult choices.”

“We will be thoughtful, we will be transparent, we’ll be fair, we will work collaboratively with our colleagues across the aisle to build, protect, and empower Canadians.”

The upcoming budget is projected to include a “substantial” deficit, according to Government House Leader Steven MacKinnon. While specific program cuts haven’t been announced, the Liberal government states key support programs like national dental and childcare will continue.

Carney’s government plans to balance the “operating deficit” in three years by reducing “wasteful government spending,” such as initiatives to reduce red tape. He noted that federal spending has grown over 7% year-over-year for the past decade, exceeding economic growth, a trend that must change.

The Liberal government plans to separate daily spending from capital investment in future budgets. While they claim this provides a clearer picture and prioritizes major projects, the Conservatives accuse them of attempting to “bury the deficit.”

On May 18, the former central banker delayed the spring budget, promising a “comprehensive, effective, ambitious, prudent budget”, to address the impact of U.S. tariffs.

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Big Government Locks Young People Out of the American Dream

Last Thursday’s debate among the New York City mayoral candidates highlighted an issue that is among young Americans’ top concerns today: affordability. Democrat candidate Zohran Mamdani, the frontrunner, stated that affordability was the city’s most important problem. Independent candidate Andrew Cuomo and Republican hopeful Curtis Sliwa concurred, arguing the socialist Mamdani’s proposals are impractically expensive.

Mamdani’s emphasis on the affordability issue has benefited him politically, as young people in the city struggle to find decent, affordable housing and are increasingly willing to consider his agenda of greater government intervention and control.

That would be an awful mistake because socialism, regulation, and other government policies are what have caused the affordability crisis that has arisen across the United States. The current U.S. economy is anything but free, and the problems of today’s American economic system are caused almost exclusively by government. Young Americans’ struggles in achieving home ownership reflect the decline of economic freedom in the United States.

Government regulations directly increase the cost of housing, accounting for $93,870 of the $394,300 average price of a new home in the United States in 2021, about a quarter of the home’s cost, notes Paul Emrath, Ph.D., in a study for the National Association of Home Builders.

University of Central Arkansas professor Jeremy Horpedahl observes that “in 2023 it took 31 percent more hours of work to buy a square foot of the median home, compared with 1971.” That has its greatest effect on young households: with housing prices increasing rapidly, those who already have mortgages or fully own their houses gain an ever-greater economic advantage over the young. U.S. home sales in 2024 and 2025 are at their worst in 30 years, Fortune reports.

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The GOP’s ‘Capitalism’ is Central Planning with MAGA Branding

When House Speaker Mike Johnson (R–La.) lashed out at last weekend’s “No Kings” rallies soon to arrive on Washington’s National Mall, he reached for an old conservative refrain: “They hate capitalism. They hate our free enterprise system.”

I am sure he’s correct about some of the protesters. But the message rings hollow coming from a party leader that stands by as President Donald Trump does precisely what Johnson rightly decries: substituting political control for market choice and ruling by executive order.

Indeed, what began as a populist revolt against so-called elites has become a program of state ownership, price fixing and top-down industrial control. Take a look.

Recently, the Trump administration quietly converted CHIPS Act subsidies into an $8.9 billion equity purchase in Intel, making Washington a 10 percent owner of one of America’s largest technology companies. Commerce Secretary Howard Lutnick insists “this is not socialism.” That’s semantics.

Socialism is government control of the means of production. When the government becomes your largest shareholder, that’s a strong first step.

The Intel case offends two basic economic truths. First, no group of officials can ever know enough to guide a complex industry better than millions of private investors, engineers, and consumers spending their own money. Second, the power to “partner” with business is the power to control it.

The more political capital the government invests, the more it demands in return. It’s only a matter of time until politically favored locations, suppliers, or hiring quotas shape Intel’s decisions. That isn’t capitalism.

The administration has taken shares in companies before, and it likely will again. In July, the Pentagon became the largest shareholder in MP Materials, considered the only fully operating rare-earth mine of scale in the U.S. The deal guarantees a 10-year price floor for MP output at nearly double the current market rate. MP competitors were rightly shocked.

Yet Treasury Secretary Scott Bessent recently told CNBC that Washington will continue to “set price floors” and “forward-buy” commodities “across a range of industries” to encourage more investments into U.S. production and away from China.

While this may encourage more U.S. investments in the short term, guaranteeing an unfair advantage over competitors by setting a minimum price reduces American companies’ long-run incentives to innovate and produce better output. Economists have understood for more than a century what happens when the government fixes prices above their market level: Buyers purchase less, sellers produce more, surpluses pile up and waste follows. It’s the logic of failed farm-price support in the 1930s.

There are far better options than schemes like these. As for those rare-earth minerals, the U.S. sits on billions of dollars’ worth, yet MP is almost alone in extracting them. That’s in part because excessive regulation keeps the potential locked underground, deterring investment in innovative mining solutions, processing plants, magnet factories, and the skilled workforce needed to turn our geological abundance into economic value. Deregulation is the free-market way. Mimicking the Chinese model isn’t.

If that’s not enough, the administration has nationalized all but in name the company called U.S. Steel. To approve its market-driven purchase by Nippon Steel, Trump required a “golden share,” giving him veto power over plant closures, production levels, investments, even pricing. The White House effectively dictates how U.S. Steel can operate inside the United States.

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Congress Should Miss Their Paychecks Too

This week marks the third week of the government shutdown – and there continues to be no end in sight. This week, millions of federal workers officially missed their first paycheck. These workers are staring down the barrel of piling bills; many are unable to put gas in the car or food on the table for their families.

The consequences of a prolonged shutdown are stacking up fast. Federal services are grinding to a halt. Veterans’ career counseling and regional offices have gone dark. Flight delays and travel disruptions are wreaking havoc across the country. And for every week this drags on, the U.S. economy takes a $15 billion hit. A month-long shutdown means 43,000 more Americans are thrown out of work.

And yet, there’s one group that hasn’t missed a single paycheck: members of Congress. While working-class families are about to miss paychecks their livelihoods depend on, fat-cat politicians in Washington continue to get paid. It’s time for Congress to feel the pain they’re inflicting on millions of Americans.

Congress should miss their paychecks.

Arizona Democratic Sen. Ruben Gallego displayed the hypocrisy out loud as the shutdown began. In an interview with NBC News, he defended his refusal to forgo his salary during the shutdown, saying, “I’m not wealthy, and I have three kids. I would basically be missing, you know, mortgage payments, rent payments, child support.”

Exactly, Senator. That’s precisely what millions of everyday Americans are facing right now.

Ask yourself – would this shutdown even happen in the first place if members of Congress couldn’t make their own mortgage payments or pay their own rent? If they were scrambling to fill up their gas tanks or stay on their feet? Not a chance.

My heart breaks for the families who are beginning to feel this impact while their members of Congress treat this like a political game. I’ve lived this struggle myself. In 2005, my husband Scotty was blinded by an IED suicide bomb while serving our country in Iraq. While he lay in a coma at Walter Reed, I was forced to navigate a system that offered no real support – not for him, and certainly not for me. I had resigned from my job to be by his side, while facing student loan debt and mounting care expenses. There were no safety nets, no clear guidance – just bureaucracy and silence.

That was 20 years ago. Shamefully, not much has changed. While I’m thrilled and thankful to see President Trump ensure that members of our military get paid, law enforcement, air traffic controllers, and millions of moms and dads are still missing paychecks.

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How the Federal Government Created the Subprime Mortgage Crisis

If anything symbolizes the American dream, it is homeownership—an asset that is viewed as part of a route from poverty and exclusion to independence and responsibility. However, as detailed in Part I, for over a century, state and federal governments worked to racially segregate American neighborhoods, promoting homeownership for whites while denying it for African-Americans. The result is that decades after discriminatory treatment in housing was outlawed, the homeownership gap between minorities and whites remains large.

Such a shameful condition motivated many well-meaning activists to pressure government housing authorities to expand homeownership opportunities to minority and low-income residents. The left saw this as a way to reduce discrimination and marginalization, solving the problems of past racism. The right saw it as a way to build an “ownership society” and give low-income earners a stake in the American dream, an anti-communist tactic first envisioned by Woodrow Wilson.

From the 1990s to the 2000s, both political parties bent the federal mortgage agencies to their will, continually relaxing underwriting standards to promote homeownership. Along with historically low interest rates, this led to an explosion in subprime lending, which fueled the housing bubble and spread toxic mortgages throughout the financial system. Rather than a failure of the free market, the federal government was directly complicit in the mortgage market’s spectacular ramp-up and eventual collapse.

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One Third Of Americans Have More Credit Card Debt Than Savings

One in three Americans now have more credit card debt than emergency savings, according to the latest survey by financial services company Bankrate.

As Statista’s Anna Flecks shows in the chart below, this is up ten percentage points from 2011, when the company first started polling the question.

Meanwhile, around 53 percent of respondents said that their savings were currently exceeding their credit card debt.

This is down two percentage points from the same time last year, but slightly up from 2011.

Around one in ten Americans are living paycheck-to-paycheck in 2025, not making any debt or saving up money.

You will find more infographics at Statista

Millennials were the most likely to say that they had tapped into their emergency savings over the past 12 months.

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More Americans Experienced Homelessness During Biden’s Term

The number of adults experiencing homelessness is on the rise in the United States.

As Statista’s Anna Fleck shows in the chart below, using data from the U.S. Department of Housing and Urban Development, 771,480 people were living in a state of homelessness in 2024, marking an 18 percent increase from the year before.

You will find more infographics at Statista

Two thirds of these were individuals, while one third were people in families.

Last year saw a particularly worrying rise in the number of families entering homelessness, up 39 percent from 2023, as individuals saw a 9.6 percent rise.

While it remains more common for men to experience homelessness than women in the U.S., at 459,568 men (60 percent) to 302,660 women (40 percent), the gap is narrowing.

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Auto Loan Delinquencies Surge 50% As Cracks Deepen Across U.S. Credit Markets

A month after bankruptcies of subprime auto lender Tricolor and auto-parts supplier First Brands, new cracks emerged in U.S. credit markets. This week, Zions and Western Alliance disclosed they were victims of loan fraud tied to funds investing in distressed commercial real estate. The revelations come amid broader credit trouble, and shifting our focus back to autos, there’s new data this morning about credit products tied to the riskiest consumers that have seen a 50% surge in delinquencies. 

Bloomberg cites data from the credit-scoring company, VantageScore, which reveals that delinquencies among the low-tier consumers have surged 50% since 2010. Fueling the delinquencies is a perfect storm of record-high car prices, elevated interest rates, longer loan terms, and monthly payments that average nearly as much as rent for some folks. 

Since 2019, new vehicle prices have jumped over 25% to $50,000, while average monthly payments reached $767, with 20% of borrowers paying over $1,000 per month. Loan rates now exceed 9%, worsening the affordability crisis.

Notably, prime and near-prime borrowers are now defaulting faster than subprime consumers, as lenders tightened standards for the lowest-credit segment, according to the report. The average auto loan balance has risen 57% since 2010, and many borrowers are “upside-down”, owing more than their cars are worth.

“We’re seeing the cost of cars and the cost related to car ownership increase enormously,” VantageScore chief economist Rikard Bandebo said in an interview. “In the past five years, it has increased even faster.”

Bandebo continued, “That’s a double… You’ve been hit by the increased cost of the car and then the financing cost of the car.”

“Consumers now are in a more precarious position than they’ve been since the last recession,” Bandebo said. “We’ve seen this growing trend over the last several years of more and more consumers struggling to make ends meet, and it’s looking like that trend is going to continue into next year.”

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Big Government, No Growth – The Implosion Of Statism

Rising government spending and public debt create economic stagnation and declining living standards. Many citizens believe that the state will give them prosperity and equality. However, the state only makes paper promises by issuing debt, creating a constantly depreciated currency. Taxpayers are constantly expropriated, while the recipients of subsidies become a dependent subclass. Who wins? Bureaucrats.

Deficit spending is not a tool for growth. It erodes prosperity, creates persistent secular stagnation, real wage growth decline, and poor productivity growth.

High public spending and government debt falsely inflate GDP through government outlays while, in most cases, masking a private-sector recession underneath. GDP is easily manipulated by increasing government spending and changing the calculation of GDP deflators.

The state issues debt, a form of currency, and establishes a system that continuously suffocates the productive sector. In effect, GDP and CPI serve as measures of economic strength that obscure the imbalances created by the state; GDP overstates real growth by incorporating government spending financed by debt, while CPI, like the GDP deflator, underestimates the currency’s loss of purchasing power.

Major economies face a hidden real recession for households and small businesses using “robust” headline figures bloated by ever-rising government debt. Every new dollar of debt now generates less than sixty cents of nominal GDP in the U.S. However, when we look at countries like Japan, France, the UK or Germany, the multiplier effect of new government debt is either nonexistent or negative. The consequences are evident: true productive economic expansion is hurt by rising taxes, regulatory burdens, and inflation, which reduce incentives for private investment and innovation.

Statism creates enormous disincentives for productive investment and promotes malinvestment and the constant transfer of wealth from the productive sectors to the government. Governments finance their ever-expanding budgets in privileged conditions, creating a crowding out of the private sector that suffers the consequences of persistent inflation and raising taxes.

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