Last year, G7 nations that implemented aggressive QE programs saw their unemployment rates drop by more than 1%, while those that didn't saw their rates increase or stay the same.
Ronald Czerniawski: In this week's chart, we analyze unemployment trends among G7 nations. The left axis on the chart stands for the unemployment rate as of November, and the bottom axis stands for the change in unemployment rate over the past year. The size of the bubble stands for the number of unemployed workers in each country.
For example, Italy appears to be on the far-top-left side of the graph, indicating that its unemployment rate is not only very high but that it has also increased over the past 12 months. Italy has 3.5 million unemployed workers. France also appears in the unfavorable territory as its unemployment rate remains in double digits.
On the lower-middle part of the graph, Japan and Germany show low unemployment rates, with no change for Germany and a moderate improvement for Japan over the past year.
Finally, on the far-right side of the graph are the economies that implemented aggressive quantitative easing programs--namely, the United States and the U.K. They have seen their unemployment rates drop by more than 1% over the past year.
The eurozone has now announced its own massive QE effort in hopes of achieving similar results. The European Central Bank's motive behind the new stimulus program is to fight deflation and restore price stability. However, the measures should also be able to stimulate the lackluster European labor market.
While Europe's QE is not the cure for all of its underlying structural problems, it should boost European economic activity in the short term.
