European Job Woes Make America Look Brilliant

While the U.S. economy has been recovering, Europe's has been getting worse.

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One recurring theme about the U.S. economy is that it's sort of lousy, but better than a lot of other places. Europe in particular is making the United States look like a standout performer these days.

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The latest jobs data from Europe shows the unemployment rate is 10.9 percent among the 27 nations of the European Union, and a whopping 12 percent among the 17-nation Eurozone. In the United States, the unemployment rate is 7.7 percent.

Here's the unemployment rate in a few select countries:

Germany 5.4 percent
Netherlands 6.2 percent
United Kingdom 7.7 percent
France 10.8 percent
Italy 11.6 percent
Ireland 14.2 percent
Spain 26.3 percent

Beyond that, unemployment has been worsening throughout Europe since the beginning of 2011, while it has been improving in the United States. The following chart clearly shows how the recession that began in late 2007 caused comparable spikes in unemployment in both Europe and the United States. But the United States (represented by the maroon line) has been gradually recovering, while Europe (the orange and blue lines) has entered a double-dip recession, with unemployment going nowhere but up:

Unemployment Rates, 2000 - 2013, Seasonally Adjusted

The stark contrast between the world's two largest economic regions reveals the punishing toll the Eurozone debt crisis has inflicted on the continent. The United States has at least one major inherent advantage over Europe: It's a single federal entity, with one set of laws and policies, unlike the Eurozone, which is a confederation of 17 governments sharing a single currency.

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The United States has also benefited from the Federal Reserve's extremely aggressive monetary stimulus policies, whereas the European Central Bank got a later start and has been more restrained.

But Americans shouldn't get cocky, because woes in Europe directly affect the welfare of Americans. The recent financial crisis in tiny Cyprus was worrisome enough to send global stock markets into a brief tailspin. Debt problems in bigger nations like Spain and Italy could still cause a global economic convulsion. And European countries such as Germany, the U.K., France and the Netherlands remain large U.S. trading partners, so when business slows down there, it slows down here, too.

As the whole world struggles to regain its economic traction, however, the resilience of the U.S. economy is making the United States a world leader once again. U.S. banks are generally healthy, with lending on its way back toward normal levels. Consumers are regaining confidence, spending more and taking modest risks. Those trends will ultimately persuade businesses to hire more, pushing unemployment down.

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The best scenario would be a full-speed recovery on both continents. But failing that, it's hard to complain if the U.S. economy outpaces Europe's.

Rick Newman's latest book is Rebounders: How Winners Pivot From Setback to Success. Follow him on Twitter: @rickjnewman.