Italy's economy clearly has trouble, but it's problems don't seem obviously worse than in the United States. After all, it is not looking at the collapse of a housing bubble, and the size of its current account deficit relative to GDP is about half of that in the United States. Its unemployment rate is about a percentage point higher, but when we adjust for the people who are missed by the Labor Department's survey, the unemployment rate in Italy is probably pretty close to our rate. So why is the BBC predicting disaster? It seems to be because the businesses are whining. Of course businesses always whine, that doesn't mean the economy is in trouble.
--Dean Baker
