Business, Finance & Economics

Unemployment: It's not just an American problem


Demonstrators clash with police on Oct. 20, 2011 in Athens, Greece. Despite another massive bailout, experts are asking, is Greece ungovernable?


Milos Bicanski

Unemployment is a huge problem in the United States, of course. But this key economic fundamental is even worse right now in Europe.

The number of unemployed people across the euro zone rose to 16.2 million in September, Eurostat reported

For a little perspective on how bad things are right now in Europe, that's 188,000 more people than in August and is the worst showing since the EU started collecting this data in the late 1990s.

It's also the biggest monthly jump in two years. The unemployment rate in Europe, meanwhile, rose to 10.2 percent.

How does that compare with the U.S., still the world's largest economy? According to the Bureau of Labor Statistics, 14 million Americans are unemployed, and the U.S. has an unemployment rate of 9.1 percent. 

To make matters worse for our European friends, a separate report today said inflation across the 17-country euro zone remains at a 3-year high of 3 percent.

This latest one-two punch highlights the challenges faced by new European Central Bank chief Mario Draghi who starts his new gig tomorrow.

Here's how the Financial Times adroitly summed up today's European economic gloom:

The surge in joblessness came amid mounting evidence that a recession looms in much of continental Europe. To avoid a crunch, eurozone leaders’ response to the debt crisis agreed last week had to be implemented “promptly and forcefully”, the Paris-based Organisation for Economic Co-operation and Development warned on Monday. It also recommended that the ECB cut interest rates rapidly. 

The OECD slashed its growth forecasts to show the eurozone economy expanding by only 0.3 per cent in 2012, assuming there is no sudden crisis. In June, it had forecast 2 per cent growth. Failure to restore confidence and a repeat of the financial turmoil seen in recent years could see some large OECD economies contracting by as much as 5 per cent by the first half of 2013, it added.

For more GlobalPost coverage of Europe here's Michael Goldfarb's recent profile of Draghi, which asks if the Italian banker is up to the job, as well as Ken Maguire's analysis of whether Greece — ground zero of Europe's ongoing debt malaise — can even be fixed. 

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