As I learned how the PMI correlates with GDP Growth Rate in my previous article, I wanted to see how the U.S. and the Eurozone are doing (Chart 1). It looks like the Eurozone is starting to contract, while the U.S. is still increasing in GDP growth speed.
A pretty big divergence is going on and it started all in late 2011. Remember that? The period where the ECB printed trillions of euros in a few months?
It's obvious that printing money doesn't help the economy and this contraction is the absolute evidence of that.
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| Chart 1: U.S. VS Eurozone PMI |
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