Before the worst of the global financial crisis hit in 2008, eurozone unemployment hovered near 7.5%. The latest numbers from April showed an increase to 12.2%, but there are drastic differences between countries. In Spain and Greece, the jobless rate is above 25%. In more stable countries, like Austria and Germany, joblessness holds near 5%. Perhaps more alarming, however, is the jobless rate for those aged 16 to 25. For both Spain and Greece, this number is well above 50%. For the eurozone as a whole, it is 24.4%. Longer term, permanently entrenched unemployment becomes a real risk, which lowers the potential for sustainable growth in coming years. These data are just the latest evidence of deterioration in the broader economic trends. Greece is now in its sixth year of a devastating recession. GDP numbers in Germany show that growth is contracting in even the region's stronger economies. The eurozone as a whole is experiencing its longest recessionary period since the union was established in 1999. By contrast, the U.S. has shown steady growth since 2009, with labor market data dropping sharply below the peak jobless rate of 10%.
One strategy that has been floated is the implementation of negative deposit rates paid by the ECB for money held at the central bank. Negative deposit rates would encourage banks to lend funds, rather than choosing to hold that money at the ECB. On the downside, this would limit the ability of those banks to generate profits. This strategy would also put renewed selling pressure on the euro. So, while the ECB is still more likely to enact measures to promote lending for small and mid-sized businesses, hopefully installing a ceiling on the rising unemployment rate, the broader data continue to show deteriorating trends. The eurozone continues to lack evidence of a stable recovery when compared to its U.S. counterparts. This creates a scenario that favors selling euro-denominated assets, and buying assets denominated in the safe-haven U.S. dollar. Disclosure: At the time of publication the author had no position in any of the stocks mentioned. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.