IN CASE YOU THOUGHT UNEMPLOYMENT WAS BAD IN THE USA….
Americans spend a lot of time talking about how weak the economy is here. And while things are certainly not booming, it’s all relative. This chart from Reuters will really put things in perspective for you. Every single country listed below has a higher unemployment rate than the USA. And no by a small margin. The latest reading of 8.2% in the USA (very high by any measure) is still substantially lower than all but Germany.
In the case of Spain, Greece, Ireland and Portugal it’s not even comparable. The worst news is that it looks like all of these countries are beginning to suffer renewed bouts of economic weakness. Not surprising given the austerity measures that have been pulverizing them for years now. So the good news is the USA is a good house in a bad neighborhood. The bad news is the other houses aren’t getting any prettier any time soon and that’s only going to make it more difficult for the value of the American house to appreciate.
Cullen Roche
Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.
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This post made me wonder if they were comparable (I am sure Eurostat massage the figures differently to how US authorities do so)… And here’s a partial answer:
http://www.unc.edu/depts/europe/euroeconomics/Unemployment.php
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BTW – Absolutely love the blog.
How about a chart with employment population ratio for each county? The different social contracts make this comparison meaningless.
Yeah I have all but stopped paying attention to the unemployment rate and instead look at the employment-population ratio.
Hey, how come I missed when the Benelux, Finnland plus others left the eurozone?
To be fair, some of the economies in this chart are in there because they are the bigger ones (in terms of populace and GDP), while others seem to be in there for being the bigger losers. Or why is Ireland in there while the Netherlands is left out. Reuters seemed to be more concerned about making its case than about giving an accurate picture (a picture that wouldn’t be lacking in any dramaticism even without such selectivism)
But corporate profits are up and that is what apparently matters more to central bankers and governments.
I’m hope the overlords know what they are doing because 1 in 5 (Spain) to 1 in 10 people unemployed (US/Euro) is a melting pot asking for trouble. (We know the history of how Hitler came into power). Then again maybe the overlords have learned and as long as they keep the taps flowing with food stamps, social programs and cheap public entertainment the underlings might be appeased even while the corporate sector continues to enrich themselves.
I am mystified by your apparent acceptance of the ridiculously low 8% number for the U.S.? As granular as your analysis gets on so many topics (one of the reasons I like your site)you seem to ignore the labor participation numbers and the relevance of the U-6 number, which puts the U.S. closer to 9-12%
Still better than a lot of other places, but a far cry from 8%.
Cheers
Compare apples to apples, not apples to oranges. The methodologiesw are very different, also why using U-3 and not U-6, the unemployment numbers you are using are comparable to broad definitions of definition, at least you should be using U-6. And I can tell you some of these countries have massive black market activity (though governments are trying hard last times to cut that).
Employed to population ratios are a better way to look at it. Also add the population in prison in the USA to unemployed and add European inmate population too. You will see scary things there, it’s not a small effect, because there is an order of magnitude of difference between inmate population in continental Europe relatively to USA.
I think the U.S. prison situation is a crime (ah, pun intended i guess) in that the Gov is willing to spend billions on it rather than preventative measures, but I don’t agree that you can add the prison population to the unemployed. They are, for all intents and purposes, “employed” in that the Gov is “paying them” (room and board) for the job of staying off the streets.
As for as comparing percentage of employed population – fine – so what are the numbers in europe? I see a few comments from people seeming to claim that Europe would compare better to the U.S. if that was used instead. I’m extremely skeptical of that, but… let’s see the numbers, and not assume one way or the other.
From an economic (not to speak of social!) cost point of view inmate population (and criminality overall) is much more costly than the unemployed. It makes sense to account for these “externalities”, off course that creates a lot of employment in security and law related sectors (sort of the national variation of military keynesianism), if that is real wealth, you tell me… You may as well create a JG which would be less costly (in both ways, social and economicaly) and more efficient LOL. Still is a low number, let’s say a 0.5% more of total adult population (even if the trend still is going higher).
About unemployment numbers, seen them all, I’m not saying USA is in a position like that of Spain (which unfortunately is a rather unique and complex problem, which right now has to be fixed though migration, as the population increased almost a 20% in a decade when the wealth to support the population was just an huge RE bubble, imaginary). But what are you going to compare it to: to the mean of the EMU (or the EU), to individual countries, then using what measures, and underemployment? and median (not mean, median) incomes? and social safety nets? Germany+France+Italy is most of the EMU population (only big country left is Spain), Portugal, Ireland or Greece are like smaller states in the USA, why not include Austria or Netherland?
I tell you to use a simple one which can hardly be manipulated by methodological changes: employed to population ratios, then the unemployment (or employed) distribution gets normalized very very fast, sure there can be a 2% difference between this nation and that, but overall numbers are significantly similar. And overall european numbers are more ‘honest’.
And in any case, employment is not an end but a mean, it’s like obsessing with meaningless things like GDP, and arguing how great your economy because GDP has grown a 3% when it has been the case that shares of productivity and real income growth relatively to real GDP growth has been falling for 30 years (while corporate profits and wealth inequality went parabolic) and relatively to real inflation have been losing purchasing power and disposable income since more than a decade and people is more unhappy than 3 decades ago.
Relatively speaking the U.S. is doing exceptionally well. Not nearly as well as we would if our leaders understood the monetary system, but at least we’re deficit spending when other countries are inflicting austerity on themselves.
Not only should we compare the U.S. to other countries, but another apples to apples comparison would be the current recovery vs. the Great Depression’s and/or vs. Japan from the 1990′s thru to today. Further, when looking at other grievances, like prices at the pump, look at other countries too. China is about where our most expensive states are, Japan is at least 50% higher, and european prices at the pump are at least double. Of course few are smart enough to accurately compare, and some hope to inaccurately compare either to get elected, or get paid for their punditry. The money is in fear mongering which is an easy thing to do so long as people don’t understand the core of MMR and MMT.
EVERY country defines unemployment differently. So, you’re comparing apples with oranges. E.g. U6 unemployment in the US is already over 20%. Why wasn’t U6 used to draw the line for the unemployment in the US ? Was the chart made to make americans feel good ?
About that low German unemployment: In Germany a person over 60 (55 ?) years old and who has worked enough years can stop working and go into “”frührente”" (to be translated along the lines of “”Early retirement”" or “”Early Social Security”") and then this person is not considered to be unemployed anymore.
Please don’t call this “”Socialism”" because the employers benefit from these arrangements, AS WELL. This is an easy way to get rid of older and less productive workers. But it comes at the expense of the rest of society/the economy.
“Please don’t call this “”Socialism”” because the employers benefit from these arrangements, AS WELL. This is an easy way to get rid of older and less productive workers. But it comes at the expense of the rest of society/the economy.”
It is a ‘socialist’ policy, but only an American could find that an insult, in the rest of the world its pretty much meaningless (just a definition of a policy).
“Why wasn’t U6 used to draw the line for the unemployment in the US ? Was the chart made to make americans feel good ?”
…oh..i don’t know….it’s an election year, maybe? Anything to paint a (“favorable”)picture for your guy. Hooey, that’s what it is. I’ll be sure to forward a link to my unemployed friends, surely it will cheer them up. The only thing certain: nothing is as it seems, from anyone. That is, relatively speaking.
Regardless of how the figures are calculated or massaged, a few things are clear:
— Europe has higher structural levels of unemployment than the USA, even in good times. This is explained very well in the link given in the first comment at the top.
— Portugal, Ireland, Greece, and Spain (The PIGS) are really bad off right now, and with the exception of Ireland, their situation is rapidly worsening.
— Only Spain, Portugal, and Greece are doing worse now than they were in the 1990s. Ireland, as bad as it is, hasn’t exceeded its 1990s unemployment levels.
How is Iceland doing with unemployment? They are the only country I know of that refused to help their banks. They even put the blame for dishonesty on the bankers.
Use U6 and the US is somewhere between France and Portugal without their social net for the unemployed.
Nice piece of propaganda though!
To quote Georg Carling: it’s called the American dream because you have to be asleep to believe it.
Two can play at this game. Do you think the European numbers are accurate?
Sorry, but sounds like apples and oranges to me.
Apples to oranges.
If you want incrediable numbers….. think road freight & Ireland and put them together.
Y1997 :Tonnes KM :6,998 million km
Y2007 :18,707 million km
Y2010 :10 ,924 million km
Thats not too bad but…..
Tonnes carried was more affected by the poping of the housing madness.
Y1997 :Thousand Tonnes carried : 103,836
Y2007 : 314,826
Y2010 : 125,865
Cullen, since unemployment trends are so much better in USA than in Europe, do you mean to imply that you are now bullish on US equities? Do you think the equity rally from last Oct 3rd to now has legs, and will continue? To answer my own question meant for you, it would appear to me that we may end up with a sideways market for awhile, to reflect the relatively sluggish growth figures on US economy that have been coming out in the last 4 weeks or so. No recession this year, but no boom. GDP growth probably settles down to about 2% in 2nd half. Do you agree?
… “So the good news is the USA is a good house in a bad neighborhood”
Ohhh Yessss!
…would reduce spending on food stamps that help 46 million people or …
… 22 percent of residential properties with mortgages are currently underwater or …
… U-6 Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force
14, 5 % and not in labor force…
“So the good news is the USA is a good house in a bad neighborhood” Ohhhh Yesss ;-D
“The latest reading of 8.2% in the USA (very high by any measure) is still substantially lower than all but Germany.”
Don’t trust the stats. In Germany, the real unemployment rate is close to 14%, not 5.7% as shown in this graph.
A huge number of people in Germany works, more or less, but earns not enought so they need transfer from the social system: not counted as unemployed.
Another huge number is attending tax funded further education courses, mostly consecutive ones, never gets a job but: not counted as unemploeyd.
A lot of twists and tricks with the statistics take care that the official picture is much brighter than reality.
But I guess there is the same game going on in the other countries.
The reason we are one of the lowest in the world is that we don’t use the U-6 as the real number. If anyone believes we are only 8.3% you may as well believe in the tooth fairy.