European Central Bank President Mario Draghi told media outlet Europe 1: “We have not yet emerged from the crisis. The recovery for most of the euro zone will certainly begin in the second half of 2013.”
For some reason he believes that a European Union with more centralized economic decision making and more oversight will help growth. Unfortunately, neither of those things are in place. The bickering about them among member states may mean they never will be. And no amount of policy will reverse the severe recession in southern Europe nations, including Spain and Greece. Larger economies by gross domestic product in both France and Italy have stalled as well. Absent stimulus, and with large austerity plans in place or about to be put into place, how can the tremendous and historically high unemployment levels in these countries be relieved. The answer is that they cannot be, at least in the foreseeable future.
Recovered U.S. Cities
The new Brookings Institution Global MetroMonitor shows that only three of 300 U.S. metropolitan areas have recovered to prerecession levels. The research also showed the rise of emerging economies and the struggles of the old developed ones:
Three-quarters of the fastest-growing metropolitan economies in 2012 were located in developing Asia, Latin America, and the Middle East and Africa. By contrast, almost 90 percent of the slowest-growing metro economies were in Western Europe and North America.
The report was based mostly on data from Oxford Economics, Moody’s Analytics and the U.S. Census Bureau. In the United States, the only cities with economies that have recovered to prerecession levels are Knoxville, Dallas and Pittsburgh. That leaves all other large metro areas in America either still in recession, or very near one.
EU Unemployment Still Rising
Eurostat reports that unemployment in the euro area has risen again:
The euro area (EA17) seasonally-adjusted unemployment rate was 11.7% in October 2012, up from 11.6% in September. The EU271 unemployment rate was 10.7% in October 2012, up from 10.6% in September. In both zones, rates have risen markedly compared with October 2011, when they were 10.4% and 9.9% respectively.
As would have been expected, the region’s economically wounded countries got the worst of it:
Among the Member States, the lowest unemployment rates were recorded in Austria (4.3%), Luxembourg (5.1%), Germany (5.4%) and the Netherlands (5.5%), and the highest in Spain (26.2%) and Greece (25.4% in August 2012).
Also expected among the young:
In October 2012, the youth unemployment rate was 23.4% in the EU27 and 23.9% in the euro area, compared with 21.9% and 21.2% respectively in October 2011. In October 2012 the lowest rates were observed in Germany (8.1%), Austria (8.5%) and the Netherlands (9.8%) and the highest in Greece (57.0% in August 2012) and Spain (55.9%)
Douglas A. McIntyre