Mama Mia! Italian Elections Continue the Anti-Establishment Trend
The results of the election last weekend in Italy continue the international trend of angry and frustrated voters dumping those in power, desperately seeking some way to improve their conditions. While many continue to trumpet an improving global economy, and there are some improvements to be sure, many nations have not yet recovered from the damage of the financial crisis. The Brexit vote, Trump vote, weakened Angela Merkel in Germany and this weekend’s vote in Italy are all signs that voters in those nations want to see significant changes. Voters don’t do that when they are satisfied with their pocketbooks today and opportunities for tomorrow.
Sunday, March 4th Italians headed to the polls amidst and economic backdrop that has become increasingly frustrating. Economic growth in the nation has been weaker than many other European Area Nations.
source: tradingeconomics.com
Even more telling is the weakening trend in per capita GDP.
source: tradingeconomics.com
Italy’s unemployment rate remains well above historical norms and well above that of Germany.
source: tradingeconomics.com
source: tradingeconomics.com
Youth unemployment has been even more grim, peaking at 43.40 in March 2014 after having been as low as 19.40% in 2007. This high level of youth unemployment has meant that the best and the brightest are much more likely to leave the struggling nation than to stay and fight an uphill battle.
source: tradingeconomics.com
Wage growth (year-over-year) has been weakening for decades but has been sitting at record lows post-financial crisis, below 2% since 2011 and below 1% since 2016.
source: tradingeconomics.com
The bottom line is while the markets have been priced for sunshine and roses, we continue to see voters around the world frustrated with weak economies, poor wage growth and the lack of opportunities to improve their circumstances. While the 2017 markets may have been a bit like watching a sunny summer afternoon PGA tournament, 2018 looks to be more like the latest reality TV drama.
