Greek Unemployment and GDP

By: Ian Campbell | Fri, Jun 10, 2011
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The officially reported U.S. unemployment rate currently is 9.1%, and is frequently said by pundits to be at about 20% if all those Americans who have 'given up' looking for work are counted. Under any assumption the current U.S. unemployment rate is at extremely high levels by any historic standard - and everyone agrees, without really knowing where improvement is going to come from - that the reported U.S. unemployment rate needs to come down, and come down sooner than later.

With that background, an article yesterday titled 'An Unbelievable Look At Greek Unemployment' - reading time 2 minutes - sets out Greece's latest reported unemployment numbers. From my perspective they are 'off the charts'. Broken out by age categories, and summarized on an annual basis for each of the years ended March, 2006 - 2011, they show that from March, 2008 to March, 2011 the unemployment rate (rounded to the nearest %) for 15-24 year olds increased by 16% to 43%, for 25-34 year olds increased by 11% to 23%, for 35-44 year olds increased by 6% to 13%, with somewhat declining % increases in that 3 year period as age increased - except in the 65-74 year old category where unemployment increased from 0% to 5%. Overall, reported unemployment increased in the three year period ended March, 2011 by 7% to 16%. And those are the reported numbers. Think of what the unreported numbers are if the unreported U.S. numbers have any credibility, and there are parallel unreported numbers in Greece.

Either way, the Greek numbers (if credible) strike me as unsustainable going forward. I think this has to be the case because they show that the age groups with the greatest unemployment rates are the three groups that span the ages of 15-44 - those in any society that ought to be highly productive, if not arguably for non-management positions the most productive.

I have said in a number of commentaries over the past three years that it is youth unemployment that of all the unemployment categories concerns me the most. Typically I have quoted the saying 'idle hands make the Devil's work'- in reference to youth unemployment. To the extent Greece has problems with its Sovereign Debt issues, I suspect it may have even greater problems on its horizon if its youth unemployment rates stay where they now are, let alone increase further.

On a second, and I think potentially quite important note, an article titled 'BOOM: Rally Evaporates, Greece Delivers Ugly GDP, As 2-Year Yields Explode Past 25%' - reading time 1 minute - says that Greek GDP was just revised sharply lower. The article also says that "Greek austerity reforms have come to a standstill". I questioned in a commentary last week whether Greece could be the 'little boy with his finger in the dyke' - the Hans Christian Anderson story told to children 50 years ago. Interestingly, the price of physical gold is down slightly to U.S.$1,535 as I write this, and so for the time being at least seems to be taking this Greek GDP news in stride.

Third, and again I think on a potentially important note, a recent article titled 'Strikes Hit Greece as Govt Eyes More Austerity' - reading time 3 minutes - reports that workers at Greek 'state-owned' companies walked off the job this morning to protest the Greek Government's privatization plans. It seems to me expectation of enhanced near-term social disruption in Greece is not unreasonable. Something to look to in the next few days, weeks and months.

 


 

Ian Campbell

Author: Ian Campbell

Ian R. Campbell, FCA, FCBV
Economic Straight Talk

Through the Economic Straight Talk Newsletter Ian R. Campbell shares his perspective on the world economy, the financial markets, and natural resources. A recognized business valuation authority, he founded Toronto based Campbell Valuation Partners (1976), Stock Research Portal (2007) a source of resource companies market data and analytic tools, and Economic Straight Talk (2012). The CICBV* annually funds business valuation research in his name**. Contact him at icampbell@srddi.com.
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