A Bit of Optimism Is OK.

Finally, some good news. After more than two years of skirting recession, Germany is starting to grow again. The German economy will expand by 1.7 percent in 2004, according to the latest upbeat forecast from the IFO Institute in Munich. Employment is up. Business confidence has risen for the third month in a row. Frankfurt's stock market has surged more than 60 percent since its March low.

Whom to credit for the new optimism? The spinmeisters would claim Chancellor Gerhard Schroder and his wide-ranging package of labor and entitlement reforms, called Agenda 2010. The Bundestag is expected to pass the measures this week. And last week Berlin's ruling and opposition pols agreed to a long-overdue reform of the country's out- of-control public health-care system. With an energizing 16 billion euro income-tax cut planned for January, it looks as though Germany is the sick man of Europe no more.

Alas, all is not as it appears. First the growth forecast. A third of next year's anticipated boost owes more to a quirk of the calendar than to better economics. Come 2004, more national holidays will fall on weekends--an increase in days worked, in other words, not faster growth. The remainder of the projected uptick reflects hopes for a U.S. rebound. The employment gain is even phonier. The government claims to have created 930,000 new part-time jobs--but in fact most already existed and are simply being counted for the first time because of a change in tax laws. In fact, as German businesses continue to shrink at home and expand abroad, German unemployment will continue to increase-- from 4.4 ...