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Renewed Recessions Rock Europe Amid Slower Growth in U.S.

April 27, 2012 at 12:00 AM EDT
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JUDY WOODRUFF: Now, the economy, here and abroad.

The Commerce Department reported today that U.S. economic growth expanded 2.2 percent in the first quarter*. That was down from the final quarter last year. The news came as recession begins to grip Europe again.

Ray Suarez has our story.

RAY SUAREZ: The story behind today’s numbers? American consumers spent more in January through March, but governments and business spent less.

Still, the U.S. numbers would be welcome news in Europe, where economic carnage continues. Spain, Europe’s fourth largest economy*, has fallen back into recession. Unemployment has jumped to near 25 percent, and more than half of young people under age 25 are jobless.

SORAYA SAENZ DE SANTAMARIA, Spanish deputy prime minister (through translator): In this moment, perhaps, we are living one of the worst moments for the Spanish economy, as the figures of unemployment show.

RAY SUAREZ: Spain’s debt rating was cut again this week to near junk status, as the government tries to implement budget austerity measures in the face of growing discontent.

ANDRES RODRIGUEZ, caterer (through translator): If they take some sort of measures in investment, I think we could improve, but not with this present system of cuts.

RAY SUAREZ: Similar cuts have been imposed across Europe, an effort to control crushing debt. But, as recession returns, those measures are triggering political shockwaves, and not just in Spain.

Today, the government in Romania lost a no-confidence vote. The nearby Czech Republic’s government moved to the brink of collapse before surviving a no-confidence vote this afternoon. And the Dutch government collapsed Monday, leaving a caretaker regime to pass an austerity package.

Britain is now confronting a double-dip recession, news that triggered fireworks as Labor Leader Ed Miliband lit into conservative Prime Minister David Cameron on Wednesday.

ED MILIBAND, British Labor Party leader: I’m sure the prime minister spent the last 24 hours thinking of an excuse as to why this has nothing to do with him. So what’s his excuse this time?

DAVID CAMERON, British prime minister: I don’t seek to excuse them. I don’t seek to try and explain them away.

RAY SUAREZ: Indeed, Cameron again defended the notion that austerity now will ultimately lead to growth.

DAVID CAMERON: Our banks had too much debt, our households had too much debt, our government had too much debt. We have got to rebalance our economy. We need a bigger private sector. We need more exports, more investment.

RAY SUAREZ: Even Europe’s largest economy, Germany, is now projecting relatively meager growth for the year, just 0.7 percent.