Europe’s economy shrinks

Spain’s economy has essentially been standing on three legs: construction, tourism, and shopping. The construction leg broke last year and the tourism is weakening as well. Consumer confidence is down in Spain and across Europe, and prices for about everything are steadily rising. Food prices are up 7% since 2007, so people are more reluctant to open their wallets, especially for bigger items like cars and appliances. This appliance store owner says the economy is in worse shape than even the most pessimistic descriptions. He says his retail sales are off by 30-50% and people have lost all their buying power in the space of one year. A year ago is when the U.S. sub-prime mortgage crisis started and it has reached overseas. A year ago is when Spain’s housing bust went broke as well.