Notayesmanseconomics just exposed the data and the reality is ugly.
GDP contraction of 0.1% in Q1 proves the French economy is stalled while every major indicator screams recession.
Energy inflation spiked 16.8% and is effectively cannibalizing household purchasing power.
Consumer confidence is rotting at levels not seen since March 2023 because nobody has cash to burn.
The government 0.9% growth target is a statistical delusion when even the best case barely hits 0.6%.
Fiscal reality is cratering with a 5.1% deficit and debt rocketing toward 120% of Gdp.
Is France now in an economic recession?
This morning has brought some economic news from France that will attract attention.
The GDP growth forecast for the first quarter of 2026 has been revised downward by 0.1 percentage point (after rounding) compared to the initial estimate published on April 30, 2026…….In the first quarter of 2026, the gross domestic product (GDP) in volume declined slightly (-0.1%).
That immediately poses the recession question because the quarter we are now in has the impact of the conflict in the Middle East as a larger factor. Plus if we look into the detail we see something that flattered the numbers.
Conversely, the contribution of inventory changes has been revised upward to +1.0 percentage point (compared to +0.8 percentage points in the initial estimate).
As you can see the Inventory Fairy was in play which poses a question along the lines of Blood, Sweat and Tears.
What goes up must come downSpinnin’ wheel gotta go ’roundTalking about your troubles is a crying sinRide a painted pony, let the spinnin’ wheel spin.
Also we have an official denial and those who never believe anything until you get one of those will be mulling this.
France Fin. Min. Lescure: There is no need to be alarmed about French GDP (@FinancialJuice)
In fact he went further according to BFM.
The government “remains vigilant, without giving in to alarmism” after the publication by INSEE of indicators which show a deterioration of the economy, with a gross domestic product (GDP) down 0.1% in the first quarter and rising inflation , reacted Economy Minister Roland Lescure on Friday.
The use of the word “vigilant” is interesting because central bankers use it to make it look like they are doing something when they are not.
If we switch to the latest business survey from the 23rd of this month then there was something to be worried about.
France’s private sector economy suffered its sharpest
contraction in five-and-a-half years during May, according
to S&P Global ‘flash’ PMI data, as an accelerated decline
in services activity was accompanied by a fresh drop in
manufacturing production.
It led them to conclude this.
Output has now contracted for two successive months,
with the rate of decline accelerating in May to its highest for just over two-and-a-half years. The survey data indicate that the euro area economy looks set to contract by 0.2% in the second quarter.
Their reading was especially weak.
The headline S&P Global Flash France Composite PMI
Output Index decreased sharply in May to 43.5, from 47.6 in April, its lowest level since November 2020.
If we now try to translate this into expected GDP I notice that S&P Global duck the issue in their release. However they suggest a -0.2% for the Euro area on numbers similar to what France had in April so using the same measuring stick might give you a -0.4%. As I regularly point out the PMIs are not a perfect guide as I recall the end of 2023 when it reported a sharp decline and the GDP reading was 0%, But this time it is lower than then.
Also we know that the ECB takes it seriously especially its President the former French Finance Minister Christine Lagarde.
What happened in the first quarter?
The official release nails the main player in one sentence.
Household consumption declined slightly (-0.2% after +0.3%). Consumption of goods fell sharply (-0.7% after +0.5%), driven by a decrease in energy consumption.
A weak performance from domestic consumption driven by higher energy prices. That poses a question for this quarter where so far we have also seen high energy prices. Other parts were stronger.
Consumption of services increased at the same rate as in the previous quarter (+0.2%), hampered by accommodation and food services, but supported by real estate services and primarily non-market services
That suggests it is not only the UK that is facing problems with its hospitality industry. Also there is another area that seems to be troubled.
Gross fixed capital formation (GFCF) fell sharply (-0.6% after +0.2%), mainly due to the significant decline in GFCF in construction (-1.7% after +0.4%).
We only have the business survey for April but as you can see the PMI signaled that more problems were on their way.
Posting 38.1 in April, the headline figure was deep inside contraction territory (readings below 50.0 indicate a decrease in activity), and fell from March’s 38.4 to signal a sharper rate of decline.
Dropping into the high thirties is the sort of number we saw from Greece when it had its depression.
One other factor was in play which we are told was aircraft exports or rather the lack of.
Exports fell sharply in the first quarter of 2026 (-3.5% after +0.9%), driven by a decline in aircraft exports. Imports continued to decrease (-0.9% after -1.0%). Overall, the contribution of foreign trade to GDP growth was significantly negative in the first quarter of 2026 (-0.9 percentage points after +0.7 percentage points).