Public spending is coming to the rescue for an economy that is facing severe structural problems After two years of recession, it seemed that Germany’s economy had stabilized in 2025 and was even inching in the direction of a return to growth. Sure, nobody was sounding the trumpets of a full-fledged recovery, but it seemed the worst had passed. That was, admittedly, before the US-Israeli war on Iran muddied those waters. But even apart from this black swan event, what has really been going on in the German economy deserves a closer look. After all, there are different ways of generating GDP growth and not all of them have the same deeper implications. In Germany’s case, it turns out the nascent recovery was almost entirely fueled by state spending while the private sector is in virtual free-fall.…