LyrArc Article Gist
U.S. GDP growth was a seasonally adjusted annual -1% in the 1st quarter of 2014, according to the Commerce Department.

LyrArc Article Gist
The IMF in its 2012-2013 Global Economic Outlook Report presented at its annual meeting in October 2012 estimates global economic growth of 3.3% in 2012 and 3.6% in 2013. This is a drop of 0.2% for 2012 and 0.3% for 2013 from its earlier forecast in July 2012. Under the IMF definition the global economy GDP does not have to decline for a recession. Advanced economies growth estimate is 1.3% in 2012 and 1.5% in 2013. Emerging market economies growth estimate is of 5.3% in 2012 and improving to 5.6% in 2013. Specifically for the eurozone growth estimate is decline of 0.4% in 2012 and 0.2% growth in 2013. U.S. growth is estimated at 2.2% for 2012. China's growth rate is estimated at 7.8% in 2012 with a growth uptick to 8.2% in 2013 as a much smaller stimulus than the one in 2009 kicks in. This will help commodity exporters like Brazil, Australia, and Canada. Two surprises are Brazil's growth with a significant improvement to 4% in 2013 from 1.5% in 2012 because of sharp interest rate cuts and improving demand from China. The other is India which is expected to show a significant slowdown with a growth estimate of 4.9% as the government faces what the Kelkar committee report calls "a perfect storm" of a large current account deficit and a budget deficit, and failure to attract foreign investment. Growth in Japan is expected to slow to 1.2% in 2013 from 2.2% in 2012 as the government imposes a sales tax increase to reduce its deficit. ...

LyrArc Article Gist
The Labor Department reports that there is no U.S. productivity growth in the 4th quarter of 2014 over the prior year. U.S. productivity growth is about 1.3% for the period since 2009, showing a weak expansion. Job gains of 295,000 in February 2015 show an improving jobs picture, yet wage gains are tepid. This is partly due to slack in the labor market not reflected in the official unemployment rate of 5.5% for Feb. 2015, with a large number of part time workers who do not have full time work. The low productivity growth is another reason for low wage gains in this economic recovery. Economic growth is also weak with economists estimating GDP growth for the 1st quarter 2015 at 1.5% annualized. GDP growth is in the 2-2.5% growth range since 2009. Hourly wages are up less than 2% since 2009, with hourly wage growth in Feb. 2015 at 2% over the prior year. Weak business investment is part of the reason for the sluggish economic growth. Macroeconomic Advisors estimates the capital investment for equipment software and buildings is seeing growth of only 0.3% in the last decade, much lower than in the last forty years. With most of the gains from the internet technology advances already made there is less prospect of a sudden increase in productivity....

LyrArc Article Gist
Serious concern about lower consumer spending in the U.K that would reduce growth and reduce government tax receipts. The unemployment rate has remained at 7.6% for 22 months. Wage levels are not keeping up with inflation of about 4.5%. The increase in the sales tax from 17.5% to 20% has added three quarters of one percent to the inflation rate, according to the National Statistics Office. VocaLink says annual wage growth in the three months through May 2011 was 1.8%, much lower than the inflation rate. Deep spending cuts are going into effect in 2011-2012, and about 300,000 jobs would be lost in the public sector with spending cuts by 2015. The IMF has reduced its estimate for growth in the U.K. to 1.5% from 1.7%. At the same time the Bank of England is under pressure to increase the interest rate of 0.5% (which is a record low), to control inflation. Britain under prime minister Cameron plans to cut government spending from 47% of GDP to 40% of GDP over six years. This will take 6 years of spending cuts, something even a previous prime minister Margaret Thatcher was not able to do. The government's Office of Budget Responsibility predicts a drop in the deficit from 11% of GDP to 7.9% by March 2012. Yet a lot depends on government tax receipts which in turn depend on economic growth. Britain showed a large deficit of 10 billion pounds in April 2011, and the situation is fraught with a high degree of uncertainty....

LyrArc Article Gist
The Commerce Department says U.S. GDP was up an estimated 3.5% in the 3rd quarter of 2014. Government spending was up in the quarter, trade helped increase growth, consumer spending and business investment was steady, with housing still weak.

LyrArc Article Gist
Malaysia's debt to GDP ratio increased to 242% in mid-2012 from 192% in 2008 according to McKinsey. As export growth has slowed the Malaysian government is relying on credit expansion to consumers and large capital projects such as the planned subway project in Kuala Lumpur to sustain growth. Similiar credit expansion is seen in other Asian countries- Thailand, Vietnam, Singapore, Hong Kong. The period 2008 to 2013 has seen a rapid acceleration in credit expansion in these countries and especially in China. China's debt to GDP ratio increased to 183% in mid 2012 from 153% in 2008, according to McKinsey. Nomura Holding's economist Zhiwei Zhang, and other economists say it is above 200% when government data on "shadow banking" lending institutions such as trust companies is included. IMF economist Giovanni Dell'Ariccia has studied of debt expansion and credit booms since the 1970's. He and other economists at the IMF have found that credit booms- the rapid increase in credit to GDP ratios- end up in crises one third of the time, result in below par growth in another third of the time, and only in one third of the time does growth continue at the high pace. Alex Frangos talks to government officials in Kuala Lumpur who do not take seriously the high vacancy rate for office buildings in the capital of about 20% even as new office towers are being built. Bob Davis gives the example of government owned Hunan Expressway company in China which has a huge road building program and doubled its 2009 debt levels. Another state owned company in shipping China Cosco Holdings increased total debt from 85 billion yuan in 2009 to 123 billion yuan in 2012. As export growth slowed in China in 2009 credit expansion is driving growth. The normal restraints of the market are absent in China's state owned companies. Charlene Chu, senior director of Fitch Ratings Inc in Beijing, says 2012 demonstrated that the Chinese government cannot slow credit growth without risking a decline in growth. China's GDP growth in the 1st quarter of 2013 slowed to 7.7% from 7.9% in the 4th quarter of 2012. This poses a serious problem for China. China has never experienced the kinds of problems seen in Asia after the 1997 banking crisis, in the eurozone today, and in the U.S. following the financial crisis of 2008, making government officials prone to complacency about the risks....

LyrArc Article Gist
The discount for Canadian crude oil prices, because of higher shale oil output in the U.S. midwest and lack of enough pipeline capacity to get Canadian crude to Gulf Coast refineries, is affecting the Canadian economy. The lower price for Canadian crude was at about $20 per barrel lower than the U.S. benchmark price in April 2013. This discount has reduced Canada's GDP growth for the second half of 2012 by 0.4%, according to the Canadian central bank. The discount was as high as $40 to U.S. benchmark price for Canadian heavy crude in January and Febuary 2013. Continued discount is expected till enough pipeline capacity is created for Alberta's heavy crude to get to Gulf Coast refineries in the U.S.

LyrArc Article Gist
Congressional Budget Office projections show the difficult choices facing the U.S. - tackling the deficit by letting the Bush tax cuts and the payroll tax cuts expire will lead to low growth. The alternative is growth with much higher deficits. GDP growth would be at about 2.3% in this fiscal year if the payroll tax cut is kept till December 2012. In fiscal 2013 if a number of tax cuts are permitted to expire and across the board spending cuts take effect as scheduled GDP growth would decline to 1.1%. Taxes would increase by $465 billion in 2013 over 2012 if tax cuts expire - individuals and companies would pay $2.99 trillion in taxes in fiscal year 2013 in that scenario. Spending cuts would take effect in Jan 2013 for $1.2 trillion over 10 years. The result- " a sharp fiscal contraction" in the words of CBO director Elmendorf. Unemployment would go up to 8.9% in 2012 year end and 9.2% in 2013 yearend from 8.5% today, if no agreement is made to extend tax cuts and block spending cuts. The risk of not taking the debt reduction actions is to let the debt grow to $11 trillion over 10 years, an unsustainable path, compared to about $3.1 trillion over 10 years if tax cuts are permitted to expire and spending cuts take place. This is the tough choice facing America in 2012, and comes when Europe is facing similar tough choices....

LyrArc Article Gist
Neil Irwin of NYT provides some counter intuitive ideas on U.S. Fed interest rate policy. He says it can't be take as a given that the Fed will raise rates in 2017-2018. This depends on how much punch there is in the Trump economic policies for stimulus, and for infrastructure spending, tax cuts. He cites Senate Majority Leader McConnell who said he would like to keep "tax reform revenue neutral." Getting large spending and pushing up the deficit is likely to run up against Republicans in Congress who have for 8 years opposed large spending increases and large deficits. Trump has given few details about his stimulus or infrastructure spending plans. He says the scale of the spending might not match the talk. Irwin cites JP Morgan Chase economists who have kept their forecasts for GDP growth just under 2% for 2017 and 2018. And he points out that even Trump appointees at the Fed might act independently. The Fed might look at being cautious considering that increased trade tensions with China, and the unpredictability of a Trump administration could hurt growth. Irwin does not mention the uncertainty in other areas such as policy towards Russia on which the Republican party and Congress have very different views than Trump, tensions over Taiwan, that can also affect growth. ...

LyrArc Article Gist
Retail sales in China dropped sharply. Retail sales dropped from double digit increases for most of 2014-2017 to single digits in 2018- sales dropping to 8.1%. Government restrictions to prevent a housing bubble restrained housing sales, and policies to control corporate debt limited growth. Higher inflation for food and housing, have led to asharp pullback in growth of consumer spending.  Trade tensions with the U.S. have hurt consumer sentiment. The feeling that China's growth would stabilize because of its connections to the world economy is fading as consumers see persistent trade tensions with the U.S. including tariffs of upto 60% in tit for tat actions as hurting China's prospects.  The GDP growth is expected to be about 6.5% for 2018 according to government estimates, which experts say is actually much less or even half that as exporters retrench in the face of slack demand in China and lower sales to the U.S.  Rail and other infrastructure projects that were considered unsuitable are now being given approval in efforts to boost the economy. More tax cuts and expanded deficit spending are policies likely to be followed.  At foreign companies no overtime, and job cuts are commonplace especially in the auto industry. ...

LyrArc Article Gist
This WSJ editorial points out a big concern in the third quarter 2012 economic growth figures- the figure showing non-housing related investment contracting by 1.3%. It says the U.S. borrowed $5 trillion and all it got in return was 1.7% economic growth- 1.7% being the growth in U.S. GDP for the first 9 months of 2012. It also points out that the growth came from consumer spending and the Federal Reserve's money printing. The consumer spending would be hard pressed to continue if incomes remain stagnant without the capital investment and hiring from the private sector. Government spending accounts for 0.7% of the GDP growth, and estimates for private sector growth in output is about 1.3%.

LyrArc Article Gist
Moody's Investors Service lowered the UK's credit rating from triple A to Aa1 and changed the outlook to stable. The managing director of Moody's sovereign ratings, Bart Oosterveld, says Britain' debt will continue to grow in 2013-2015 and only stabilize after 2016, in Moody's central scenario. Analysts say this is unlikely to increase Britain's borrowing costs. Britain's Chancellor of the Exchequer, Osborne, says the debt problems built up over many years, and declining growth in the eurozone hurts Britain's exports. Moody's says Britain's debt will peak at about 96% of GDP in 2016 after continued sluggish growth in coming years. This move follows a downgrade of France by Moody's from triple A rating in November 2012, and downgrade of the U.S. from triple A rating by S&P in August 2011.

LyrArc Article Gist
Krugman points to the connection between the failure to achieve debt reduction through debt forgiveness and the sluggish economic growth in the eurozone and U.S., five years after the global banking and financial crisis of 2009 and four years after the beginning of the eurozone debt crisis in 2010. In the U.S. debt reduction for homeowners was delayed with a wave of foreclosures, and in Europe austerity budgets were the norm as Germany pushed hard for austerity policies. In 2014 small relaxation of austerity to give relief to voters took place in Greece, France, Italy and Spain, with austerity budgets still in place. Growth also slowed in Germany to slight contraction in the third quarter and no growth in the fourth quarter of 2014. This is leading to the formulation of new policy to address growth challenges in the eurozone. Debt to GDP is growing in eurozone countries and Britain because of lack of growth, even though spending cuts have been made, showing the need for rethinking policy. ...

LyrArc Article Gist
The title of this BBC report is a misnomer as the content of the report is that India and the US are actively negotiating a Trade Agreement after some disagreements on Indian oil purchases from Russia bumped up from 2% before 2019 to about one third to 40% of its imports by 2024. This is being rapidly reversed and some estimates by consultants CLSA show India only made $2-3 billion from Russian discounted oil sales, a miniscule amount. On American interest in agricultural exports India can take in some products other than grain which it sees as important to feed 1 billion people and food security.  DJT says the "special relationship" between India and the US is important, and says "there's nothing to worry about. We just have moments on occasion". India has much bigger stakes in trade with the US. In fact it's growth into the third largest economy in the world means doubling or tripling its trade with the US and the European Union in the next few years. This would narrow the difference in GDP and per capita between India and China, as India and China started at the same GDP and per capita in 1950. Only in 1990 with China's trade with the US has the Chinese GDP and per capita income increased to create the huge gap with India. ...

LyrArc Article Gist
Signs that the consumer credit boom in Turkey is reaching alarming proportions are evident from the surge in credit card use. Credit card debt has increased by 20% in 2011, after an increase of 23% in 2010. There are an estimated 3.7 million delinquent cardholders and 2.5 million cardholders who only make the monthly payments. The Turkish regulators are now requiring cardholders to payoff at least half of the balances before they can use ATM's for cash. Banks charge interest rates of about 29% and cardholders who are using credit cards for the first time -as more of the Turkish people are joining the middle class during the country's decade of high growth- do not understand the risks. Turkish banks, Garanti, Yapi Kredi, and Isbank, are in the list of top ten card issuers in Europe, according to Nilson Report. Card purchases average $3,500 per year, in a country with per capita income of $12,300. Turkish banks have pushed card use, with Garanti Bank's website giving users cash for frequent use of cards, and asking users to show the card even if they are buying an apple at the grocery store. The volume of personal consumer loans has doubled since 2009, because Turks use the consumer loans to pay off the high interest rate balances on credit card debt. Analysts at ING Group in London who follow Turkish banks say the delinquency rates will be above 9% in 2012. The IMF's Global Financial Stability Report of Sept. 2011 has identified the credit growth to GDP ratio as one of the key factors leading to an economic crisis. This was true for the U.S. before 2008, for Portugal and Ireland before the eurozone crisis. China's credit growth was up 29% in 2009 and Hong Kong's up 30% according to the IMF Report. Turkey and Vietnam also have high credit growth to GDP ratios according to the IMF. Turkey's high capital inflows can quickly reverse in a crisis increasing the risks facing the country....

LyrArc Article Gist
The U.S. unemployment rate declined to 7.7% in February 2013 from 7.9% in January, with 236,000 jobs added. IHS Global Insight's forecast of GDP growth is 1.5% for the first half of 2013 because of spending cuts and the increase in Social Security taxes in Jan 2013. Macroeconomic Advisors predicts the federal spending cuts will lead to loss of about 700,000 jobs, with most of this ocurring in the second and third quarters. As a result economists expect the unemployment rate to be at about 7.5% by the end of 2013. The job gains were broad based including manufacturing and business services, and 48,000 construction jobs were addd. At the same time the labor force participation rate declined to 63.5% reflecting some workers retiring and some discouraged workers dropping out of the job market.

LyrArc Article Gist
China's Finance Ministry is having a difficult time controlling local governments using local government financing vehicles to invest in more infrastructure, airports roads and subways. One such city is Wuhan which plans six subway lines, three bridges over the Yangste river and a new airport. Much of the money comes from land sales. The Finance Ministry in a 2013 report pointed to the unreliability of land sales for future borrowing as the property market is slowing, and because it is highly unpopular to requisition land for land sales. This matters because the IMF says debt is growing faster in China than when Japan, South Korea and the U.S. fell into deep recessions at different times between the late 1980's and 2009. Local government debt accounts for one fourth of the increase in China's domestic debt since 2008. New rules by China's bond agency in Dec. 2014 prevents investors from using low grade debt to borrow cash. In the past local governments found a way around the central governments effort to curb growth of debt by restructuring the local government vehicles or some other way, as Wuhan has done. Wuhan Urban is the local government financing vehicle for Wuhan and its debt increased by 20% in 2013. Wuhan's mayor, Tang Liangzhi, is pushing construction to the point where he is known as Mr. Dig, Dig. One reason for China's slowing growth below 6-7% is the need to control the growth of debt. Local government debt in China reached 36% of GDP in 2013, double the figure in 2008, and will increase to 52% of GDP in 2019, according to the IMF. And the increase is not proportionally delivering the same results as before. JP Morgan estimates that over 4 units of borrowing are needed in 2015 for every unit of investment, compared to less than 2 units of borrowing for every unit of investment in 2007. PRC Macro Advisors of Hong Kong says half of the borrowing by financing vehicles goes to pay interest on existing debt in 2014. There are 8000 such local government financing vehicles in China today each competing to build infrastructure in its neighborhood, in the case of Wuhan to build a computing back office for financial companies and as transportation hub, even though its uncertain whether this will be realized or not. The problem is that alternative investments as an opportunity cost are being neglected, the hospital not being built as China's population ages with underinvestment in health care, and the private company with better returns that is unable to find financing. A classic example of crowding out of better return investments as a glut of housing and road/bridge/ airport infrastructure gets built. The central government is wary but faced with slowing growth pushes problems down the road, what experts call a Japan syndrome....

LyrArc Article Gist
Half of the 17 percentage points of lower investment in Britain between 2016 and 2023 came from administrative barriers with EU and of Brexit. Britain had deindustrialized and hoped to get growth from so called "clever industries" such as finance, media, and higher education. The Tories party led by Johnson and then Sunak painted a rosy picture for Britain leaving the European Union and doing better without it by working with China and the US and connecting to global supply chains. They ignored the actual facts of the globalization cycle reversing itself leaving Britain exposed in the storm.The slump in investment from Brexit hit Britain hard, the Ukraine war meant higher prices for energy imports from Norway and the US. The result is that only about half percentage point of 2 percent cumulative GDP growth in Britain between 4th qtr 2019 and 4th qtr 2023 came from jobs growth compared to about 3.75% in the EU economies. Eurozone growth at 4% was twice that in UK, and the US with higher productivity and job growth was growing at four times that in UK and twice that in EU at 8% over this period. ...

LyrArc Article Gist
The effort to shift China's economc growth away from the rampant overbuilding in housing and industrial capacity of the past to domestic consumption, and focus on meeting the demand for better medical care, quality of food, education and other quality of life products. China's leaders met at the Central Economic Work Conference in Beijing in Dec. 2015 to work out ways to make this shift so that growth rate of 6.5% and other goals can be met. Plans include reducing industrial overcapacity, dealing with overinvestment and unused inventory in housing, reducing financial risks from high corporate debt to GDP ratio approaching 160% estimated by Standard and Poors Ratings Services. By comparison the U.S. debt to GDP ratio is 70%. A steep rise resulted from the huge China stimulus program of 2008-2009, when the ratio was 98% for China. Experts such as Derek Scissors of the American Enterprise Institute are pessimistic about the prospects of successfully implementing reforms, saying reducing industrial overcapacity was a goal of the new Jinping Li-Keqiang leadership in 2013, but not much progress has been made in 2 years....

LyrArc Article Gist
The U.S. Federal Reserve released its new economic projections for GDP growth, inflation and unemployment in 2012-2014 and the decisions reached by the June 2012 Fed Open Market Committee (FOMC) meeting. This follows uncertainty in financial markets with the $125 billion rescue of Spanish banks by the EFSF, the eurozone rescue fund, and 10 year Spanish bond yields reaching 7% even after the rescue announcement. The Fed lowered all its forecasts to reflect the gloomier outlook. The "central tendency" is for the U.S. GDP to be in the range of 1.9%-2.4%, dropping it by 0.5% from the April forecast and 2013 forecast with a similiar drop to 2.2%-2.8%. 2014 GDP forecast is at 3.0-3.5% Inflation is forecast at 1.2%- 1.7% range, instead of 1.9%-2.0% for 2012 and is at 1.5%-2.0% for 2014. Unemployment is is forecast at 8.0%-8.2%, increasing by 0.2% for 2012 from the April forecast, and with a similar increase is at 7.5%-8.0% in 2013. Unemployment gradually declines to 7.0-7.7% in 2014. The decision reached by the FOMC is for the Fed to continue its program called Operation Twist to extend the average maturity of its balance sheet beyond June 2012....

LyrArc Article Gist
World Bank projections of Indian growth rate are lowered from 6.6% to 5.8% because of DJT US administration's 50% tariff on imports from India. "It is in America’s national interest, then, for South Asia, and especially India, to grow at a rapid clip. That would create a counterweight in Asia to China’s massive economic and military expansion." This is the opinion of the Editorial Board of The Washington Post. It goes on to say that -  "But Trump is determined to negotiate a grand trade bargain with Chinese leader Xi Jinping, so he didn’t impose secondary sanctions on their purchases of Russian crude.Trump wants U.S. trade policy to be more self-interested, but it doesn’t serve America’s strategic interests to strengthen China’s position relative to its neighbors. At some level, the administration surely knows this." The Washington Post has identified a basic flaw in the US policy towards India. Both parties in America have fallen into a trap of believing that first Japan, then China with accelerated economic expansion in the 1920's and 30's and in the 2000's and 2010's  are not going to run into issues with such expansion, this being the military and the separation from US economic cooperation that enabled the economic expansion of both Asian countries. Another aspect is that in 1950 China was similar in size of economy to India at 1.18, in 1903 and in 1962 at 1.18, and the gap between China and India is only a story of the last 2 decades. By 2047 India surely has the potential to close this gap with economic and technological integration with the US and European economies that were the pillars of China's economic expansion in an earlier period.  There are other aspects of culture and size- The Bhagavad Gita and the Bible provided Gandhi with an integrated view of western civilization. With its interactions and adoption of western institutions and government, of law, the new Indian state and its neighbor Indonesia represent 1.7 billion people in Asia, with Japan and the Philippines 2 billion people twice the size of China.   ...

LyrArc Article Gist
Ian Talley provides this excellent account of how this drop in oil prices is likely to add to economic growth in major world economies, removing any ambiguity about the positive effect on the global economy. West Texas Intermediate crude dropped to about $65 from $105 between June and December 2014. The IMF estimates growth in 2015 will increase from 3.1% to 3.5% largely because of the lowering in energy costs. JP Morgan Chase economists see an addition of 0.7% points in global growth in the first half of 2015. ECB president Draghi sees the lower oil prices as an unambiguous positive. Estimates from Rhodium Group show major oil importing countries seeing import bills cut by $500 billion if prices remain low for 6-8 months, with $90 billion going into the U.S. economy. IMF estimate is that only 20% of the drop in oil prices is from lower demand, about 80% from higher fuel efficiency, increased supply using new technologies, decisions by OPEC to lower oil price, increases in supply. Based on estimates by the Rhodium Group, IEA and the IMF, the extra money flowing into the economies of the U.S., Asia and Western Europe from reduced oil import bills, as measured in percentage of GDP is: the U.S. 0.5%, Germany 0.8%, Japan 1.2%, China 0.8%, India 1.8%, South Korea 2.4%. Italy and France and other oil importing countries benefit. The impact comes at a time when Japan, China, India and eurozone economies badly needed a boost after significant slowdown in growth in 2014. It could not have come at a better time and because it is technologically driven as in the case of highly fuel efficient automobiles and new oil exploration technologies, a self sustaining process. The corresponding impact for oil exporters is: Russia -4.7%, Nigeria -5.4%, Venezuela -10.2%....

LyrArc Article Gist
In the most recent Global Financial Stability Report out in Sept. 2011, the increase in the ratio of a country's outstanding credit to GDP is highlighted as a key warning light indicator for country economies. An increase in this ratio of over 5% signals a warning light according to the IMF. It tells us that borrowing is expanding at significantly faster rate than the growth of the economy. Using this indicator would have set a warning light up for the U.S. before the 2008 mortgage crisis, and a warning light well before the financial crises in Greece, Portugal and Ireland. The outstanding credit to GDP ratio went up for China by 24 percentage points in 2009, with 4% percentage point increase in 2010. The ratio was up 30 percentage points in Hong Kong for 2010. The warning light is also up for Turkey and Vietnam. Capital inflows into countries that can be suddenly reversed, and overvalued currencies are a danger for emerging market countries and act as supplemental indicator warning lights. Brazil and South Africa have overvalued currencies. Turkey has high capital inflows. Only a small portion of this is foreign direct investment, the rest helps support a high amount of lending and credit provided by the banks. That a significant portion of this is in short term borrowing poses additional risks, as evident in the 1997 Asian financal crisis for S. Korea, Thailand and Malaysia....

LyrArc Article Gist
The growth in U.S. GDP was 1.7 % in 2011, yet unemployment dropped by 0.7% in the last 12 months to 8.3% by Feb. 2012. A pickup in hiring is seen in job figures. Christina Romer gives as an explanation to the rise in unemployment in 2009 to 10%, more than expected, and the drop since then, to the overreaction of companies to the financial crisis by laying off workers and freezing hiring- with hiring picking up as conditions return to normal levels. The unemployment rate as defined is also not an accurate measure of the jobs situation, as it reflects only workers who are looking for work, and many workers drop out of the jobs market when they are discouraged especially the long term unemployed. Taking into account people who have dropped out of the labor markets the unemployment rate was 11% in Nov. 2009, according to Luce in the Financial Times- in Ezra Klein, Washington Post 12/12/2011, Wonkbook: Real unemployment rate 11%. Lawrence Katz, Harvard Labor economist also cites this as one of three jobs crises in unemployment today that need to be addressed, the other two being: foreclosures and debt, and the low number of jobs added because of automated manufacturing- in Friedman, NYT, 12/10/11, The Next First 100 Days. Explanations for the low GDP growth as unemployment declines is a likely productivity slowdown. Prof. Robert Gordon of Northwestern University, sees a slowdown in productivity. Worker output for every hour worked, how productivity is measured, increased only 0.4% in 2011 and 0.9% in the last 7 quarters, and is trending downward in the longer term. A more likely explanation is that unemployment is still at higher levels but is understated in unemployment figures....

LyrArc Article Gist
Sweden which appeared resilient in the early part of the eurozone financial crisis is seeing a sharp slowdown in exports. The government growth forecasts show a steep decline in growth to 1.1% in GDP and unemployment at 8.2% in 2013 as eurozone exports decline. GDP growth forecast for 2014 is at 3%. The decline is from the 3.7% growth in 2011. About a third of Swedish exports go to the eurozone countries. Sweden's steel company SSAB has put workers on a 4 day work week and a 20% wage reduction as demand declines. Finance minister Anders Borg says "Our assessment is that Sweden is facing a couple of lean years. It is becoming clearer that the crisis in Europe and developments in the U.S. are again costing jobs and weighing on growth in Sweden."