The Mirage of Youth Unemployment
Outrageously high youth unemployment – supposedly near 50% in Spain and Greece, and more than 20% in the eurozone – makes headlines daily. But these numbers result from a flawed methodology, making the situation appear far worse than it is.
PARIS – Economists worldwide need better ways to measure economic activity. Relying on GDP growth rates to assess economic health, almost all of them missed the warning signs of the 2008 financial crisis, including an $8 trillion real-estate bubble in the United States, as well as property bubbles in Spain, Ireland, and the United Kingdom. Together with households, financial institutions, investors, and governments, economists were swept up in the financial euphoria that led to excessive risk-taking and severe over-leveraging of banks and households. Even the eurozone’s macroeconomic imbalances largely went unnoticed.
PARIS – Economists worldwide need better ways to measure economic activity. Relying on GDP growth rates to assess economic health, almost all of them missed the warning signs of the 2008 financial crisis, including an $8 trillion real-estate bubble in the United States, as well as property bubbles in Spain, Ireland, and the United Kingdom. Together with households, financial institutions, investors, and governments, economists were swept up in the financial euphoria that led to excessive risk-taking and severe over-leveraging of banks and households. Even the eurozone’s macroeconomic imbalances largely went unnoticed.