Continuing European Economic Slowdown & Its Impact on Prices

I think that the economic slowdown in Europe is just getting started. Continuing economic slowdown is likely, supported by many macro economic factors that indicate persistent decline over the next months. One of the indicators that feeds into GDP forecasts is this:

Germany, among other major Euro-area economies, has enormous retail inventories oversupply versus sales numbers. This makes it difficult for retailers to sell at a profit, especially when inflation slows (disinflation), so retailers can't pass costs off to consumers as easily. At the same time, new orders drop as domestic wholesalers purchase less (because of excess inventory), while internationally, there is economic slowdown (exports go down).

Germany Retail Inventories vs. Sales

Germany New Orders

Meanwhile, bankruptcies are starting to increase. They are increasing on a lag relative to increased interest rates, and this is happening while economic activity is slowing down. So, interest rates are going up, raising the cost of borrowing and debt payments for businesses that will have to contend with the results of economic slowdown.

Germany Business Bankruptcies & Interest Rates

The data looks similar in other major European countries and in the USA.

German electricity spot prices have fallen in line with a weakening economy.

Over the past year they have some correlation to GDP year-on-year (YoY) % change. See the below image: the red percentage numbers indicate the YoY percentage change in GDP.

The correlation is stronger to rates of change than the YoY, but the YoY is a significant factor in hinting at trend.