The German economy could hardly be in better shape as Angela Merkel formally began her fourth term as chancellor Wednesday. Unemployment is almost nonexistent, stock prices are at record highs, and there is almost no inflation.

But the political compromise that allowed Ms. Merkel to remain in power could bring that boom to an end. She had to bend to demands from her party’s junior coalition partner, and agree to roll back deregulation that, since 2005, has unleashed the country’s economy.

Now, with Europe’s economy gaining momentum after a prolonged slump, Germany — the Continent’s economic powerhouse and de facto leader — risks heading in the opposite direction.

Ms. Merkel, who finally took the oath of office Wednesday along with her cabinet, faces the same political quandary afflicting many industrialized nations, including the United States. Life should feel great, but to many people, it doesn’t. Their wages haven’t budged, their jobs seem less secure, and they believe the good times have passed them by.