The year 1980 is likely to go down in West German history books as the end of the era of economic miracles.
Telltale signs of structural strains internally and an increasingly fierce competitive challenge from abroad -- particularly from Japanese automakers -- combined to make West Germany look almost like just another hard-pressed European economy.
Nothing reflected the tarnishing of German luster more than the sinking of the mark -- and corresponding soar of the dollar -- especially during the final quarter of 1980.
"How soft is the mark?" asked Der Spiegel, West Germany's leading weekly news magazine in a mid-December issue over a cover-page picture of a one-mark coin curling up at the edges and appearing not at all like what used to be called one of the world's hardest currencies.
This past year saw the worst downward pressure on the mark in the three-decade history of the federal republic. Some of the year-end plummet was directly attributable to the spurt in U.S. interest rates.
But much of the German currency's weakness -- indeed, a good part of at least the surface problems in Bonn -- can be traced to the decision at the seven-power summit in Bonn in the summer of 1978 to pump up Germany's already fairly buoyant economy in the interest of spurring world growth.
Above-average German growth in the past two years -- on top of which came the 1979-80 round of oil-price increases -- resulted in the emergence of the current account deficit of 30 billion marks ($15 billion) in 1980, which has been the main burden on the mark.
There is more to the problem than that. Germany's continued strong demand for imported oil, together with the country's inability this time to buttress its downturn through a vigorous export trade as it did during the 1975 recession, suggest that the nation's economic ills reflect structural, not just cyclical, weaknesses.
The impression that the German economic drive has reached a plateau -- in fact, that Germans already may be living a bit beyond their means -- is reinforced by an accelerated increase in the federal debt in recent years.
Public sensitivity to the size of the debt was heightened by Germany's recent national election campaign, effectively precluding the prospect of a sizable government spending stimulus now. At the same time, the Bundesbank (Germany's central bank) feels itself constrained against lowering interest rates -- and enlivening the economy -- because of the further weakening effect that could have on the mark.
With little fiscal and monetary room in which to maneuver, West Germany is expected to suffer a further turning of the screw in 1981. Economic growth, having slowed to 2 percent in 1980, is predicted to average zero in the coming year. Unemployment is about to top the 1 million mark -- a psychological benchmark for Germans -- and increase by several thousand more. The current account deficit should improve only to about 24 billion marks ($12 billion).
For a country normally obsessed with its economic condition, one curious aspect of Germany's downturn has been the hesitancy of the Bonn government to address it fully. A November speech by Chancellor Helmut Schmidt, inaugurating his coalition's new four-year term, acknowledged that economic difficulties lay ahead for the nation, but brushed over their potential seriousness and stopped well short of a call for national sacrifice.
Too harsh a call might have upset the political consensus that has served as bedrock for the postwar democracy. Indeed, much of the chance for stability in 1981 is seen as resting on the outcome of this winter's tough round of wage negotiations.
Recent disputes already have disturbed the traditional labor-management harmony in Germany. Strikes late in 1980 by post office and airline workers seemed to foreshadow a more militant atmosphere for the coming talks. The West German engineering union, Ig Metall, has set the scene by submitting a claim for an 8 percent wage increase against management's idea that the industry can afford only a 2-to-3 percent increase.
How fast and how well Germany pulls out of its recession will depend to a great extent on what happens in its export fields, which account for more than a quarter of the nation's gross national product.
One key unknown factor so far has been to what extent the recent softening of export demand reflected cyclical conditions in Germany's trading partners (the United States in particular) and to what extent it mirrored longer-term factors, the industrializaton and import policies of members of the Organization of Petroleum Exporting Countries (traditionally major German customers), and intensifying competition from the Japanese and others.