Economic stagnation in the USA continues. A Wall Street Journal headline reaffirmed the problem: “Job Market Loses Momentum.” Job growth in the USA has been anemic despite the massive trillion dollar infusions of stimulus aid. The U.S. has 14 million officially unemployed while the May jobs market added a mere 54,000 jobs. The jobless rate ticked up again hitting 9.1 percent. Moreover lackluster GDP growth of merely 1.8 percent in the first quarter hardly changes the game.
European economies face a mixed report card; Germany saw a strong rebound with 3.4 percent economic expansion in 2010 while France recorded 1.6 percent, and the United Kingdom 1.8 percent. Yet this year the numbers even in the higher growth economies are expected to slip while debt ridden economies in Greece, Ireland and Portugal are still sadly recording negative growth numbers. Electoral backlash can be expected. With an unemployment rate of 12 percent and a negative 2 percent GDP growth rate, Portugal’s ruling Socialists suffered a massive electoral defeat in recent parliamentary elections.
Traditionally stubborn unemployment rates in Europe range from 20 percent in Spain, to 10 percent in France and 6.7 percent in Germany. Unemployment in Europe tends to be higher given the benefits which indirectly encourage it, and rigid labor laws which discourage new hiring. But for the USA to have a longtime unemployment rate along the lines of France is rare and indeed unacceptable.
| A currency trader monitors exchange rates at the Korea Exchange Bank in Seoul. AFP/Jung Yeon-Je
The UN report states “it will take years for employment to rebound significantly in the region, as the growth outlook in not sufficiently strong.”
Japan’s economy, the third largest globally, is expected to see only lukewarm growth to perhaps 1.1 percent in 2011, down from 2.7 percent last year. Yet the massive earthquake and tsunami in March this year was not factored into growth numbers and thus is expected to serve as an unexpected drag to any acceleration. The report adds that Japan’s budget deficit was over 6 percent of GDP and as dangerously public debt jumped to almost 200 percent of the GDP.
Yes, but there is some good news too. “Asia’s developing economies sustain robust growth, leading global economy,” stresses the World Economic Situation Report. China and India are “driving the economic recovery in Asia and the world,” states the Survey, and overall economic growth in East and South Asia expanded 8.4 percent in 2010. There are some impressive numbers here. In 2010, China’s GDP growth reached 10.1 percent, Taiwan at 9 percent, South Korea and Singapore both at 6.2 percent and Thailand at 7.3 percent. Add India’s tiger economy at 8.4 percent expansion and there is reason for optimism, at least overseas.
The UN Report states, “East Asia remains the fastest-growing region in the world. Economic activity expanded by 8.8 percent in 2010 as the region recovered rapidly from the global crisis.” Even in this region, economic expansion is expected to falter this year. Usually overlooked in many economic surveys, Australia equally poses a positive outlook. “Australia is the only developed economy in the region that avoided recession during 2008-2009,” states the UN survey; the economy grew by 3.3 percent in 2010 and is expected to expand to 3.7 percent this year. This is impressive indeed.
Yet for the USA, the albatross of high petroleum prices, a deadweight $14 trillion debt, and the burden of big government, makes re-starting the engine of American growth and enterprise all the more difficult.
John J. Metzler is a U.N. correspondent covering diplomatic and defense
issues. He writes weekly for WorldTribune.com.