The European "Recovery" Is Over: Italy "Unexpectedly" Enters Triple-Dip Recession

Tyler Durden's picture

Goodbye European recovery, we hardly knew you.

It must have come as a huge shock to all hypnotized lemmings aka "sophisticated investors" who have been following the manipulated, artificial yields in the Italian 10Y relentlessly declining and thus suggesting at least some economic stability, when an hour ago instead of reporting a 0.1% increase for its Q2 GDP as widely expected, Italy "unexpectedly" reported a sequential contraction of -0.2% down from a -0.1% drop in Q1, and officially the start of yet another, its third since Lehman, recession. Then again, considering Italy's youth unemployment of over 40% just hit a record high, we use the term "unexpectedly" rather loosely.

This is how Italy's real GDP just dropped to the lowest level since 2000.


But... that means all those PMI and confidence surveys were.... absolute horseshit!?

From Bloomberg:

Italian gross domestic product unexpectedly dropped in the second quarter, showing the economy is in recession. Gross domestic product fell 0.2 percent from the previous three months, when it declined 0.1 percent, the national statistics institute Istat said in a preliminary report in Rome today. That compares with the median forecast of a 0.1 percent expansion in a Bloomberg survey of 22 economists. From a year earlier, output shrank 0.3 percent.


With Italian youth unemployment above 40 percent and sovereign debt of about 2 trillion euros ($2.7 trillion), Prime Minister Matteo Renzi is under pressure to quickly turn around the euro region’s third-biggest economy. Lower-than-expected growth may undermine his plans to bring the country’s deficit-to-GDP ratio to 2.6 percent this year and start reducing Europe’s second-biggest debt.


Renzi has acknowledged that annual GDP growth will probably fall well below the Treasury’s 0.8 percent forecast, while the government’s debt reduction plans also seem to be yielding disappointing results, Wolfango Piccoli, managing director at Teneo Intelligence in London, wrote in a research note this week.

Goldman addition:

Italian GDP declined by 0.2%qoq in Q2, a second consecutive quarter of contracting GDP (Q1 GDP growth was -0.1%qoq). Today's outturn was weaker than our and the consensus expectation of a modest increase (Cons: +0.1%qoq, GS: +0.3%qoq). Also released this morning was Italian IP for June, printing a robust 0.9%mom increase following the weak May outturn.


1. Today's GDP release is preliminary and does not include an expenditure or output breakdown (due on August 29). According to the statistical office, output was down for both industry and services.


2. The level of Italian output remains depressed at around 9% below its peak (and close to the levels seen in 2000, Chart 1).


3. Today's data are at odds with improving business sentiment. Business sentiment has generally improved since 2013, with both the Composite PMI and the Istat business survey rising steadily towards, or above, the long-term averages (Chart 2). For example, the Italian Composite PMI rose sharply from a level of around 44 early last year to around 53 two quarters later. The Italian PMI eased in Q4 (to a still robust average of 50.0) before rising to 51.9 in Q1 and 53.1 in Q2.

But the punchline, coming moments after the report, was when Goldman again repeatedly to dump European peripheral bonds with the following caveat:

We have also decided to drop our relative preference for Italy, our top pick in peripheral space in 2014H1

That will be $29.95. In soft dollars.

Finally, confirming that Europe's mythical, and just as manipulated "recovery" is also over, was German factory orders data for June, which crashed -3.2%, on expectations of a bounce from -1.6% to 0.9%. This promptly sent German 2 Year Bund rates negative and the ECB scrambling to figure out how to extend and pretend the myth that things are ok "whatever it takes."

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medium giraffe's picture

Is everyone distracted enough yet by ebolagazaukraineafghanistan?  Time to let her rip?  Could be, could be.  Some of my charts are looking very '07.

nmewn's picture

lol...its all that damned government austerity the Italian economy has been put through.

(Rolls eyes)

GetZeeGold's picture



We've had them on double secret probation for a while now.....maybe we should up it to triple secret probation.

slotmouth's picture

Don't you have to have a recovery before it can be over?

Occident Mortal's picture

Italys economy is much larger than EUR 350bn it's more like USD 2 trillion

The Limerick King's picture



The news coming out of The Zone

Is enough to make Mario groan

Italy's falling

The Germans are stalling

The meat has been stripped from the bone!

Greenskeeper_Carl's picture

I thought counting hookers and blow in the GDP was supposed to fix everything.

Occident Mortal's picture

Whoever wrote this article is a literary genius.



max2205's picture




Its all been a lie!



Accounting101's picture

Right, the 40% youth unemployment rate and all the public protests were just figments of Tyler Durden's imagination. Or maybe these Italians just have too much damn time on their hands because they can all retire at the age of 42.

(rolls eyes)

Doesn't your back get tired carrying that water for the Oligarchs?

Doubleguns's picture

That 85 billion per month was really working all across the whole world. Dominoes will now begin to fall in place with out that support. However I worry the Fed will return to this stupid game of musical chairs....but there aren't any chairs left so now what...enjoy the music folks.

Eyeroller's picture

There's an endless supply of printed paper chairs.  The only problem is that the chairs are on the Titanic.

daemon's picture

" The only problem is that the chairs are on the Titanic. "

And so are we.

Bernoulli's picture

The big question: Can you swim? How about in ice-cold water?

This will be fun.

daemon's picture

" Can you swim? "

Very well.


" How about in ice-cold water? "

Not so well.

But I have the bad feeling that this time,  with my PM coins filled lifebuoy, I will sink so fast that temperature won't be that much of a concern.


" This will be fun. "

One that may not last so long.

Ban KKiller's picture

Playing Russian roulette with automatics.

Farqued Up's picture

Lifeboats are available but takes awhile to access them. Getting late, act now.

medium giraffe's picture

Yup.  Benny was busy pumping it into Euro banks in the US, all of a sudden Euro area was able to meet LTRO obligations.  Then there was the Belgium gambit...

some appropriate (if somewhat emo) music:

Baby Eating Dingo22's picture

There are chairs, there just aren't any players left

That 85 billion is just the bow of the sinking global QE ocean liner

rsnoble's picture

So far they've been able to pull one bullshit idea after another out of their asses and make up rules as they go.

Hard telling if they are finally at the end of the rope or what will happen.  

Hopefully doesn't lead to the natural progression of war once all the digital formalities are out of the way.

Bloppy's picture

This is a waaay better distraction- BBC gardening show (!) accused of sending racist covert messages to listeners:

shovelhead's picture

I openly mock your rhododendrons.

PlusTic's picture

Of course the Fake survey data was optimistic the whole way down...

JustObserving's picture

Can Italy not lie like the United States which lies about everything so effectively?

Defining Away Economic Failure — Paul Craig Roberts

As I have emphasized for years, the West already lives in the dystopia forecast by George Orwell. Jobs are created by hypothetical add-ons to the reported payroll figures and by inappropriate use of seasonal adjustments. Inflation is erased by substituting lower priced items in the inflation index for those that rise in price and by redefining rising prices as quality improvements. Real GDP growth is magicked into existence by deflating nominal GDP with the understated measure of inflation. Now corporations without factories are going to produce US manufacturing output, US exports, and US manufacturing jobs!

Every sphere of Western existence is defined by propaganda. Consequently, we have reached a perfect state of nihilism. We can believe nothing that we are told by government, corporations, and the presstitute media.

We live in a lie, and the lie is ever expanding.

oudinot's picture

I've done business in italy and the govt. numbers are fairy tales.

The black market in italy is huge, in almosty every sector, including tax reports.

Don't believe there is 40% youth unemployment :  yes they don't have 'official jobs', but 90% of those owrk under the table for cash.

No Italian trusts their govt.

And why should they?

MalteseFalcon's picture

An important strength of the US has been the lack of a large black market and an underground economy.  In the late 70s an underground economy was beginning to form in the US.  TPTB rightly noted that if an underground economy took hold, the empire would be fatally weakened and the underground economy would never vanish. This sent TPTB into a panic and Volker was brought in to end the "inflation game."

Today the government and the economic "system" has lost all credibility and citizens will be turning once again to the underground economy.  TPTB either enact reform or the US will become just another Italy.  Permanently.

petolo's picture

The US economy is already underground as in dead and buried.

Renfield's picture

<<An important strength of the US has been the lack of a large black market and an underground economy.  In the late 70s an underground economy was beginning to form in the US.  TPTB rightly noted that if an underground economy took hold, the empire would be fatally weakened and the underground economy would never vanish. This sent TPTB into a panic and Volker was brought in to end the "inflation game." Today the government and the economic "system" has lost all credibility and citizens will be turning once again to the underground economy.  TPTB either enact reform or the US will become just another Italy.  Permanently.>>

I think your point should be emphasised. This is why the ONLY economic news that would tell me there is a real change in the trend (away from fiat, large government, and financial engineering), would be a BIG rise in interest rates, and I'm not talking to 5%. I am interested only in where the real production is, and from what I can see (at least in my corner of North America) that's now the unrecorded (or 'black') market. Your paragraph puts this in the future, but from here it looks to me like the unrecorded market is not just the future, but is already nascent, growing stronger and more confident. I like to think of it as the 'unrecorded' market, rather than 'black' (which I find undescriptive).

Official charts and reports are slowly becoming less relevant, and following/obeying the central planners affects us only insofar as we're playing in their markets & with their money. Those are also choices we can change.

Every article that ZH posts about skills, survival, education, growing things, etc. is part of the new economy (HH's articles, for example).

MalteseFalcon's picture

I agree with you.  Further we are approaching the time when any American that is not participating in the "unrecorded" market in some form is making a mistake.  Figure it out.  Jump in.  Or drown.

buzzsaw99's picture

Italy, our top pick in peripheral space...


observer007's picture

Must see:

Here's what we want you to think

GetZeeGold's picture



I'm filing that with this.....maybe we're hanging out with the wrong people.


“Their God changes the path of our rockets in mid-air, said a terrorist,”


I have somewhat of an obvious question for that terrorist.

no more banksters's picture

Seems that the plan is going well:

"We will start with Italy and Spain. We will order rating agencies to attack, exclude them from markets and throw them to the ECB trap. They will be forced to take similar measures, as Greece did, in order to receive liquidity. Then, we will attack France and Germany."

Baby Eating Dingo22's picture

but, but, but, but,but...?

GetZeeGold's picture



That's a preview of upcoming town hall discussions on the topic of Amnesty...coming soon to a town hall near you.

Ewe235's picture

All sounds mega-bullish(it) to me.  

flyonmywall's picture

25% of all people in the US lack a checking account, or don't qualify for one. If that's not a symptom of an underground economy, I don't know what is.


rsnoble's picture

I'm full on underground but I have a checking acct.  Have to have some kind of normal looking life lol.

Also I doubt the underground is the cause of all that.  Many people just cash their check (if they have a job) pay the landlord, go to western union etc and pray for food being on the shelves at the foodbank till next payday.

piratepiet's picture

are you suggesting that not all people that don 't qualify for a checking account are included in the group that don 't have one ?

Bernoulli's picture

And that is INCLUDING all possible manipulation, plus GDP contribution of prostitution and drug sales.

if they can't find those 0.2% to make it positive, then things must really be pretty messed up and maxed out already.

real number: -5%.

Smegley Wanxalot's picture

and Europe's is the model the stupid assholes in DC want us to emulate.

GetZeeGold's picture



Like that.....only better.

Accounting101's picture

Exactly! That model being austerity of course. Austerity for the middle and lower classes while simultaneously socializing trillions in private (Wall Street, corporate) debt. The result being public balance sheets are then saturated with debt and useful idiots who carry water for the oligarchs demand even more public austerity and start pulling "unfunded liabilities" out of their collective ass.

This is exactly why the Oligarchs always win. They have the people directly effected by the ongoing economic collapse fighting and blaming each other for their economic plight. Middle class idiots literally blaming their next door neighbor who may be a policeman, firefighter, teacher, city elections clerk or a grandmother collecting Social Security. It's sadistic and perverse shit.

barre-de-rire's picture

QE-bailin-grab-my-sack-qe-(conflict)-bailout-suck-my-dick-[ 2015 ]-QE-fist-fuck-bailin(conflict)-fist-fuck-bailout-[2016]...............................[2150]



ekm1's picture





USA -4% (already "offishully" acknowledged if normal GDP deflators used)






EU -6% (Italy -7%)




JAPAN -5% (Goldman sacks converging with this estimation)




I'd like to say that these are best case scenarios.

For worse case scenarios add another negative -5% on each


They are proving true as time goes by


Comte d&#039;herblay's picture

The Wisdom according to former Miss Universe, and now British Land Mine Removal specialist at HALO,  Budgie Twitters, says:

"Following the motto of ZH, which if you think about it,---- would not be a sudden occurrence but a gradual one--- the entire world of work as we know it is infinitesimally but with increasing rapidity declining------mainly due to technology and the its employment by avaricious, black hearted, black eyed evildoers among the Jewish Mafia on Wall Street, and their henchmen, accomplices, and brothers in arms in government, corporate board rooms, law firms, CPAs, and financial Analysts squeezing the last nickel of profit out of brands all over the place, in an ongoing massive global, intergalactic effort--- to have all Assets owned by one man while he shifts all Liabilities off his personal balance sheet and on to 7 billion human beans. 

In that vein, GDP will also become increasingly irrelevant as will all other metrics like Unemployment numbers, those who stopped looking for work, those who will never actually earn a paycheck due to a variety of welfare programs to provide basics of living and Cell phones, satellite TV, and homosexual flash mobs in Highland Park in Pittsburgh".

It's time then, it seems, to disregard all further references to these antediluvian, obsolete, prehistoric notions signifying growth, progress, positivity and other measures of Hope.  

A new pair-o-dimes is required and it should be the obverse of 'working', employment, careers, new businesses ('cept for the eventual de-criminalization of Merryjuana, which should be the sole 'growth' industry in the coming decades) and promotions and that would be "Leisure Time".

New metrics that observe and report on the number of hours human beans in first world countries have to devote to Maslow's 5th level,  is the new new thing.

We would appreciate it if ZH would begin to monitor, digest and dispense new posts to keep us up to date on how much more time we are investing in our personal growth in a world beyond work, like, skydiving, para-sailing, or the study of lepidoptery, phrenology, poderasty, tantric sex, Sting's staying power and other important interests that develop that we haven't even thought about, like selfie-surgery, i.e.  operations performed on one's own body for removal of fat, infected appendixes, face transplants, penis enlargement, and man-boobs (very much needed as any visit to an Italian restaurant will attest) and going viral for the rest of us to learn from.  

Gonna go have a cookie.