Editor's note: This is a brief excerpt from today's Morning Newsletter which was written by Hedgeye Director of Research Daryl Jones.
In Chart of the Day below, we compare the U.S. unemployment rate with the Eurozone unemployment rate going back to September 2010, which very pointedly highlights that the U.S. has seen a marked employment recovery, while Europe has not. In effect, the European recovery remains a lot more slack, which will help amplify deflationary pressures.
The other key takeaway from the chart is the unemployment rate for people 25 or younger in the Eurozone. This rate is over 22% and climbing. So again like Japan, Europe has a longer term demographic challenge. In Japan, of course, it is the aging population, but in Europe it is the creation of a lost generation -- a generation that is grossly underemployed and unproductive.