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1945: 2nd World war ends --> Germany is totally destroyed

The economic reforms and the new West German system received powerful support from several sources: investment funds under the European Recovery Program (aka Marshall Plan) (Wikipedia)

There was a big boom in West Germany (known as the „Wirtschaftswunder“)that began in 1950. The growth rate of industrial production increased and continued at high rate for most of the 1950s. By 1960 industrial production had increased by x2.5 the level of 1950.
Wirtschaftswunder: GPD rises and unemployment plummets

Viel Export von Automobilen (VW Käfer wurde zum Symbol des deutschen Wirtschaftswunders)

"GDP rose by two-thirds during the same decade. The number of persons employed rose from 13.8 million in 1950 to 19.8 million in 1960, and the unemployment rate fell from 10.3 percent to 1.2 percent." (Wikipedia)

Ludwig Erhard prompted the social market economy (1960-63)

Source: https://en.wikipedia.org/wiki/Economic_history_of_Germany#:~:text=GDP%20rose%20by%20two%2Dthirds,due%20course%20from%20the%20boom.

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During this time Germany's economy was suffering from several years of economic stagnation and extremely elevated unemployment rates, therefore dubbed the "sick man of Europe".

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Germany had a relatively low unemployment rate in the early part of the decade.

The 2008 financial crisis led to a gradual recovery, and by 2010, the unemployment rate was relatively low.

Germany's economy continued to grow over the years, with a robust labor market.

The COVID-19 pandemic in 2020 significantly impacted the global economy, leading to employment disruptions.

Many countries, including Germany, saw an increase in unemployment due to lockdowns and economic challenges from the pandemic.

The German government implemented measures to support businesses and workers during the pandemic period.

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Deutschland ist zerstört und verarmt.

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Marshall Plan boosts West Germany's Economy by funding it, but is mainly helped by entrepreneurship

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Deutschland wird vereinigt.

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Federal Minister for Economic Affairs, became known as the "father of the German economic miracle" after successfully promoting Germany's social market economy.

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To tackle one of the many economical problems after World War II, Germany had a currency reform in 1948. This replaces the Reichsmark with the Deutsche Mark.

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-Stagflation following the oil price shock of 1973 was the first major economic setback since the war.

-Stagflation: Combination of high inflation with uneven economic growth and high levels of unemployment. 1973-1982

-The unemployment rate rose from 0% in 1970 to ~10% towards the end of the decade. Inflation soar to 8%

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Social market economy dominant in mainland Western Europe since 1960s

Embraced by centre-right (CDU/CSU) and centre-left (SPD) administrations

Major political parties in Germany (CDU, FDP, SPD) adhere to social market economy principles

Commitment to social market economy reflected in Article 3 of Treaty on European Union

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At the end of 1989 the Berlin Wall fell combining Germany's West and East economies.

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One of the primary causes of the recession in the 1960s was the tight monetary policy adopted by the Federal Reserve under Chairman William McChesney Martin. The Fed raised the federal funds rate from 1.98% in 1958 to 4.03% in 1960 to curb inflation.

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Germany experienced a period of remarkable economic growth and stability during the 1960s, often referred to as the "Wirtschaftswunder" or economic miracle

This growth was fueled by factors such as reconstruction efforts after World War II, investments in infrastructure, and the establishment of trade agreements.

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impressive 4.6% in the 1960s, although not as impressive as in the 1950s.

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At the beginning of the 1970s, the Federal Republic of Germany found itself in a difficult economic situation caused, in essence, by high and rising inflation due to external pressures and fiscal and wage policies.

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Die Arbeitslosenquote stieg von 0,7 Prozent 1966 auf 2,1 Prozent 1967.

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Overview of Germany’s economic boom in 1870–71.

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During this period, Germany also deepened its integration with the European Economic Community (EEC), the precursor to the European Union (EU)

This integration facilitated trade and economic cooperation with other European countries, further bolstering Germany's economic growth and stability

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1945: 2nd World war ends --> Germany is totally destroyed

The economic reforms and the new West German system received powerful support from several sources: investment funds under the European Recovery Program (aka Marshall Plan) (Wikipedia)

Wirtschaftswunder: GPD rises and unemployment plummets

"GDP rose by two-thirds during the same decade. The number of persons employed rose from 13.8 million in 1950 to 19.8 million in 1960, and the unemployment rate fell from 10.3 percent to 1.2 percent." (Wikipedia)

Viel Export von Automobilen (VW Käfer wurde zum Symbol des deutschen Wirtschaftswunders)

Economic system (mixed (how does that look like?)

Ludwig Erhard prompted the social market economy (1960-63)

Source: https://en.wikipedia.org/wiki/Economic_history_of_Germany#:~:text=GDP%20rose%20by%20two%2Dthirds,due%20course%20from%20the%20boom.

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Caused by the refusal of the Organization of the Petroleum Exporting Countries (OPEC) to sell crude to the U.S. Arab oil-producing countries launched the embargo in response to U.S. support of Israel during the 1973 Yom Kippur War.

The problem: 83% of oil import came form the Middle East, so there wasn't enough oil for civilians in Germany

Not as affected as the United States

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In addition to the domestic economic difficulties Germany was suffering, developing economies—particularly those in Asia—rose to threaten its industrial sector and forced it to adapt to a creative and inventive global market.

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Rise in oil prices, largely owing to the OPEC oil embargo in 1973 and contracting economies in the developed world.

The stagflation following the oil price shock of 1973 was the first major economic setback since the war.

Stagflation: Combination of high inflation with uneven economic growth and high levels of unemployment. 1973-1982

The unemployment rate rose from 0% in 1970 to ~10% towards the end of the decade. Inflation soar to 8%.

GDP growth fell from 4.8% in 1973 to -0.9% in 1975, while the unemployment rate jumped from 1.2 to 4.7%.

Crisis was learning experience

Source:

https://www.dw.com/en/why-are-germans-searching-for-stagflation-on-google/a-59501160

https://files.stlouisfed.org/files/htdocs/publications/review/05/03/part2/Issing.pdf

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October 14, 2021

The interest in the economic event has reached a 13-year peak, according to Google data. The curiosity is being fueled by high energy prices and unceasing shipping snarls that have left many unnerved about their future.

Rising energy prices have pushed German inflation to the highest level in 28 years

What is stagflation? What does stagflation mean? Is stagflation coming? These are some of the questions many Germans have been looking up on Google over the past few days.

The sudden interest in a rather extreme economic phenomenon has been fanned by some recent investor and analyst commentaries that have flagged stagflation concerns, citing faltering economic growth and a steep rise in energy prices.

According to Google Trends data, the interest in the economic event has been trending at its highest level since the 2008-09 global financial crisis. It's no different in other major economies, including the US which is also seeing a steep rise in prices.

People in the United Kingdom are seemingly most worried, with interest in the term trending at an all-time high, spooked by long lines at gas stations over the past weeks, which offered a grim reminder of the stagflation period of the 1970s.

What is stagflation?

Stagflation is an economic event characterized by high inflation and stagnating growth plus high levels of unemployment.

The term was first used by British politician Iain Macleod in 1965 to describe what he thought was "the worst of both worlds - not just inflation on the one side or stagnation on the other, but both of them together."

Stagflation can complicate matters for policymakers - governments and central banks - who are responsible for boosting growth and keeping prices in check. That's because policies aimed at reining in inflation could lead to slower growth and higher unemployment, and measures taken to boost output and jobs could end up driving up prices.

It is impossible to implement both sets of policies at once, so "there is no obvious macroeconomic policy response," Andrew Kenningham, the chief Europe economist at Capital Economics, told DW.

For people, the impact of stagflation is twofold. Firstly, it means fewer jobs as the economy enters a recession or growth slows. Secondly, rising prices lead to lower purchasing power. People end up paying a bigger chunk of their income on essentials like food and fuel, which reduces their spending power for other items.

What's fueling stagflation concerns?

Stagflation worries are mainly being fanned by supply chain bottlenecks and soaring energy prices. Supply disruptions have taken the steam out of the economic recovery from the COVID-19 pandemic. Industrial production in Germany saw its sharpest drop in August since April last year, driven by a 17.5% crash in auto manufacturing due to shortages of components and raw materials.

The raw material and input shortages, along with higher energy prices, sent inflation in Germany soaring to 4.1% in September - the highest in almost three decades. Inflation is expected to climb even higher in the coming next months as shipping snarls persist and natural gas, oil and coal remain in short supply.

Is Germany witnessing stagflation?

Though inflation is at a multiyear high and pandemic recovery is losing momentum, economists say Germany is a long way from stagflation.

They argue that, despite the slowdown, the German economy is growing and is expected to expand about 3% this year and close to 5% in 2022. Unemployment in the country remains relatively low.

Kenningham described the current period as "stagflation lite."

"The economy as a whole is still expanding because the services sector is reopening after the pandemic and we think that the current supply-driven bottlenecks will pass in time, after which the economic outlook is reasonably good," he said.

The G7 group of major economies saw similar periods of "stagflation lite" in 2003, 2008 and 2015, driven largely by rising oil prices, but they didn't last long, according to Capital Economics.

IMF Chief Economist Gita Gopinath told reporters on Tuesday that the current situation doesn't look "remotely close like stagflation," pointing to robust underlying demand. She, however, warned of risks as prices are being driven by problems on the supply side.

"This complicates policymaking because, as opposed to a demand-driven increase in inflation, which the monetary policy has the tools for, here it's supply shocks that are reducing activity and at the same time raising inflation," she said.

Is a return of stagflation of the '70s imminent?

The global economy witnessed the worst period of stagflation in the 1970s, which was marked by rising oil prices, largely owing to the OPEC oil embargo in 1973 and contracting economies in the developed world.

Inflation in many advanced economies climbed to double digits. Germany avoided the worst but still saw inflation soar a staggering 8%. Joblessness in the Western world surged during the period, including in Germany where unemployment rose to around 10% at the end of the decade from around 0% in 1970.

Carsten Brzeski, the chief economist at ING Germany, told DW that the current period is "in no way comparable to the 1970s" as the economy is far from contracting and the job market remains stable.

"The comparison also doesn't hold because the developed world has become much less dependent on energy," Brzeski said. "They are more energy-efficient now and have other sources of energy. So, they are much less exposed to energy prices than in the past."

The inflationary pressures are unlikely to be as persistent and widespread as they were back then. The European Central Bank has been stressing that the current rise in inflation is being driven by temporary factors such as supply chain disruptions, pent-up demand and higher energy prices and that it would decrease noticeably next year.

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Why are Germans suddenly googling stagflation? - DW - 10/14/2021

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The interest in the economic event has reached a 13-year peak, according to Google data. The curiosity is being fueled by high energy prices and unceasing shipping snarls that have left many unnerved about their future.

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Increased cost of labor along with other reasons caused loss of competitiveness.

Oil price increase caused problems; solved by mid-70s through investments in own industry and exports to oil countries.

Exports to developed countries declined after peak in 1973 at 13.6% receded by 1.3%.

15 billion dollar deficit, caused by increased oil price and removal of money from the system, due to travel and transfer.

Sources: https://www.britannica.com/place/Germany/Modern-economic-history-from-partition-to-reunification

https://www.nytimes.com/1981/04/13/business/germany-s-economy-stumbles.html

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Increase in gray market sales and services, due to more contact with the west.

Source: https://www.britannica.com/place/Germany/The-East-German-system

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Why was Germany a mixed economy in the 1950s?

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Why was Germany a mixed economy in the 1950s?

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Quality & innovation: high (free-market)

Economic growth: high (free-market)

Open discussion

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What it was?

was set up in 1990

change East Germany state-owned businesses into private ones

its job was to help these adapt to how things worked in a market economy where companies compete to sell products and services

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https://youtu.be/AHQ_7vx6xx0?feature=shared

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Sold East German businesses to fast and didn't check if they were ready for the change

The people in charge didn't have enough experience to handle selling so many businesses

lots of people lost their job because their companies closed down

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Germany's unemployment rate peaked at more than 10% during this time. The high unemployment rate was a result of the inflexible labour market and strict labour rules that made it difficult for firms to hire and fire workers.

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Germany faced increasing competition from emerging economies, particularly from Asia. German industries, known for their high-quality manufacturing and engineering, had to adapt to a global market where cost efficiency and innovation became increasingly important.

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22.2.2024

Unemployment and GDP in Germany since 2010

Unemployment:

In the early part of the decade, Germany experienced a relatively low unemployment rate. The aftermath of the 2008 financial crisis saw a gradual recovery, and by 2010, the unemployment rate was relatively low. Over the years, Germany's economy continued to grow, and the labor market remained robust.

In 2020, the COVID-19 pandemic had a significant impact on the global economy, leading to disruptions in various sectors, including employment. Many countries, including Germany, witnessed an increase in unemployment due to lockdowns, restrictions, and economic challenges associated with the pandemic. The German government implemented various measures to support businesses and workers during this period.

The current economic issues include:

Economic Contraction: Germany has experienced three quarters of contraction or stagnation, potentially making it the only major economy to shrink in 2023.

Future Growth Concerns: The IMF predicts slower growth for Germany compared to other major economies over the next five years.

Complaints and Challenges: Despite low unemployment (around 3%), citizens express dissatisfaction, with four out of five Germans stating that their country is not fair. Challenges include delays in public transportation and bureaucratic obstacles.

Investment and Innovation: Germany is criticized for not adequately investing in new industries and technology. The country's investment in information technology is noted to be less than half that of the United States and France.

Global Challenges: Germany's strong ties with China, energy transition difficulties, and an aging population pose significant challenges. Trade tensions, emissions reduction, and demographic shifts are impacting the manufacturing sector.

Talent Shortage: Germany is facing a shortage of skilled workers, and demographic trends suggest that 2 million workers will retire in the next five years. Immigration rules have been liberalized, but challenges persist in attracting skilled professionals.

The article concludes by emphasizing the need for Germany to adapt its economic model to thrive in a changing world. Suggestions include fostering new firms, investing in infrastructure and technology, and addressing talent shortages through immigration reforms.

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This led to very little growth in the german economy during the early 2000s and the economic crisis from 08 just added to this problem

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Beside that, several European countries entered the EU, which led to more trade and economic integration.

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Economic Contraction

Future Growth Concerns

Public Dissatisfaction

Investment and Innovation Shortfalls

Global Challenges

Talent Shortage

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German History from 1990 - 2010 | 20 Years of German Unity

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German unemployment down more than expected