November 08, 2013
Most economists probably would not put France as one of the worst basket cases in the euro zone. While its unemployment rate is over 11 percent, it still less than half of the 20 percent plus unemployment rates being experienced by Spain and Greece. In fact if we focus on employment rates, the percentage of prime age workers who have jobs, France is doing considerably better than the United States. Its employment rate is down by less than 1.0 percentage point from the pre-recession level, while in the United States it is down by more than 4.0 percentage points.
And, unlike many countries in the euro zone, France has at least seen some growth over the last five years. By contrast, the countries under the tutelage of the troika (the IMF, the ECB, and the EU) all have lower output today than they did before the crisis. Even worse, the IMF thinks that their potential output is less today than what they actually produced in 2007.
Given this reality, readers of a NYT article on Standard & Poor’s decision to downgrade France’s credit rating must have been surprised to read the view of Holger Schmieding, the chief economist at the German Bank, Berenberg:
“there had been ‘hardly any progress at all in France’ and that the country ‘urgently needs to reform its economy if it does not want to fall ever further behind Germany.’ …
The ongoing progress in countries like Spain, Portugal, Ireland and Greece, Mr. Schmieding said, ‘makes it ever more obvious that France is Europe’s real problem.'”
I guess it’s useful to know that the NYT could find an economist who would trash the state of France’s economy. Of course Mr. Schmieding’s view is probably not shared by many economists since it is not supported by the data.
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