We are here struggling to learn the language and understand French on the TV. We have no close contacts who keep us in tune with the pulse of the French economy. Everything seems OK to us living inside this bubble of foreignness. The French people have personally been wonderful to us. Still we are aware that the economy is struggling. This editorial in the Wall Street Journal by Romain Hatchuel, a French citizen working for a New York asset management firm, pushes hard on some of the economic anomalies confronting the French government. Among them:
- unemployment at 10.6%, a 13 year high
- public debt at 90% of economic output
- failure to meet current year deficit reduction targets
- government expenditures are 56% of GDP, more than 15% higher than in the US
- consumer spending, the main economic driver, fell last year and continues to fall for the first time since 1984.
- real compensation for public employees has grown the most of any euro zone country since 2009
The article notes that the electorate hoped that a coalition backing the Socialist candidate would have more success negotiating economic concessions than the center right administration of Nicolas Sarkozy. So far they have raised taxes on the wealthy and… not much else. Sounds a bit like the political impasse in the US, except without the strength of the US economic recovery. Last night President François Hollande was on national television asking that austerity programs be put on hold and promising not to raise taxes. As in the US, politics drives politicians to support programs that seem contrary to good economic principles. From our perspective, we are wishing for the French (and for the US) a speedy economic recovery.