What's going on?

Europe�s economy is not growing very quickly � growth was a tepid 0.3% from July-September (1.2% annualised). By contrast, the US will likely grow around 2% this year.

What does this mean?

It�s not terrible: annualised growth of 1.2% is still growth. It�s just not very robust growth. The disappointing number will likely encourage the European Central Bank (ECB) to increase the rate at which it is buying government bonds�(a program known as �quantitative easing�). Why would the ECB do that? Because it thinks this will spur economic growth. How does it spur growth? By buying government bonds, the ECB would drive up the value of those bonds (and consequently lower the �yield� that the bonds pay to investors). That would lead the Euro to go down in value versus other currencies. In turn, a lower Euro would make it easier for European companies to sell their goods abroad, thereby helping companies (and the economy) grow more. �

Why should I care?

1. The bigger picture: Europe has struggled to recover from the crisis. Its economy remains smaller than it was at its peak in early 2008, while the US and UK surpassed their pre-crisis peaks years ago. There are myriad reasons for this. In general, Europe�s economy is less flexible than America's (e.g. it�s very expensive to fire workers, which therefore makes companies wary of hiring workers) � and that hasn�t helped the recovery.
2. For stocks: Low economic growth has kept stocks (relatively) cheap. European stocks appear to be cheaper relative to American stocks � technically speaking, the ratio of stock price to profits are, on average, higher in America. Poor economic growth is one major reason for this � and the economy is probably going to have to improve for stocks to perform well going forward.