The Economic Development of the Global Main

Economies

Which Countries will be the Trend Setters?

Problems with the EU Economy

Lecture #3

How is the EU Doing on Growth, Unemployment, and Inflation?

Remember that Growth and Unemployment are far more important

than Inflation

Average or Natural Growth is about 2.2% for the EU

“The EU's economy grew by 1% during the period April to June, according to Eurostat, the EU's statistical office. Growth in the 16

countries of the eurozone was also 1%”

“According to the ECB's September staff projections, eurozone growth will range between 1.4%-1.8% in 2010, and between 0.5%-2.3% in 2011.”

To reduce unemployment rate by 1%, the EU needs to

grow at a steady 3.7% for one year.

1% reduction in the EU unemployment rate is 2.2 million good stable jobs.

Interesting Question: Which Country Leads Which in Growth? Does the US

lead the EU or does the EU lead the US?

The Cross-Correlogram below indicates that the US probably leads the EU. This means that the EU might need the US to recover substantially before it can recover. Just a thought.

How is the EU doing with respect to unemployment -- in comparison with

the US?

US unemployment is low and Very Unstable, or

Cyclical

EU unemployment is relatively higher and

more stable

What is the Recent EU Record on Inflation?

Stable inflation is very important since the main costs of inflation occur when the rate

of inflation becomes variable and highly unpredictable.

Inflation in the EU has been very stable at or below 2%. There does not seem to

be any danger of deflation in the EU right now.