Whatever the U.S. unemployment figures turn out to be on Friday, they will be far better than what the eurozone—the 17 countries that use the euro currency—released today. The eurozone economy is contracting, which is to say it’s in recession, and the overall unemployment is a dismal 12 percent, up from 11.9 percent last month.
But the spread among the 17 countries is far, far wider than among the 50 American states. Unemployment is a mere 4.8 percent in Austria and 5.4 percent in neighboring, but far larger Germany. Both figures are much better than U.S. unemployment, which is at 7.7 percent. Germany and Austria are adding jobs, not shedding them like the rest of the zone. That includes jobs in manufacturing, an economic sector that is bleeding jobs elsewhere. The purchasing manager activity index, a measure of manufacturing strength, dropped sharply last month to 46.8 from 47.9 the month before. Anything less than 50 is an indication of economic contraction.
In France, the second largest economy in the eurozone, the unemployment rate is 10.8 percent, double Germany’s. In Spain it’s a staggering 26.3 percent, about what American unemployment was at the very bottom of the Great Depression. In Greece, the youth unemployment rate is 58.4 percent. In other words, nearly six out of ten of the young in Greece have nothing better to do than riot in the streets. Now that the weather is improving, they might well do exactly that.
Together with the crisis of the euro itself, most recently manifested in the bail out of the banks in tiny Cyprus, Europe is in deep economic trouble and the solutions are not easy to see. And Europe is this country’s largest trading partner. The collapse of the euro, or even a severe recession, will not be confined to Europe.
As Bette Davis famously advised, “Fasten your seatbelts, it’s going to be a bumpy night.”