Famously frugal, the Germans are now on an epic shopping spree

Germany’s parsimonious consumers are on a shopping spree the likes of which has not been seen in decades.

In January retail sales jumped 5.3% compared to the prior year. That’s the highest year-on-year change seen since at least the mid-1990s.

Why? For much the same reason that Americans are feeling better lately: Falling gasoline costs and tight labor markets are driving improvement in real—that is, inflation-adjusted—earnings.

Everybody knows that Germany is the economic powerhouse in a euro zone chock-a-bloc with wheezing economies. But while it might smart for struggling economies to see signs of a spending surge in Deutschland, it’s important for them to remember that this is precisely what the euro zone needs. Indeed, it’s exactly the kind of consumption-led economic shift that weaker European economies have been hoping for, as increased German consumption provides markets for goods and services from the country’s important European trading partners.