Spanish unemployment has hit a new record high, official figures have shown.
The number of unemployed people reached 5,639,500 at the end of March, with the unemployment rate hitting 24.4 percent, the national statistics agency said.
The figures came hours after rating agency Standard & Poor’s downgraded Spanish sovereign debt.
Official figures due out on Monday are expected to confirm that Spain has fallen back into recession.
Host Marco Werman talks with The World’s Gerry Hadden in Barcelona.
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Marco Werman: I’m Marco Werman. This is “The World”. We woke up this morning to some disappointing news about the economy. According to the Commerce Department, US economic growth has slowed down this year. Well, we can consider ourselves lucky to be growing at all. Some countries in Europe don’t have it that good. A few days ago, Britain officially declared a double-dip recession and today Spain got clobbered with a triple whammy of bad economic news. Over to The World’s Gerry Hadden in Barcelona.
Gerry Hadden: The first piece of bad news is that Spain is now back in a recession. This is the second recession in two years, so it’s double-dip for Spain, just like in the UK. The second is that unemployment went up over 24 percent in the first quarter of 2012. And the third piece of bad news is that the Rating Agency Standard & Poor’s downgraded Spain a couple of notches and is predicting that the recession will likely last through 2013, all of which will make borrowing money for Spain that much more difficult.
Werman: And with the recession I understand that consumer spending is way off.
Hadden: Exactly. Consumer spending dropped for the 21st consecutive month this month. Part of the problem is that as people lose jobs, obviously, they reign in their spending and even the solution that the government is proposing in terms of reigning in its debt is likely to hurt consumer spending as well because essentially what the Federal Government wants to do is raise the sales tax and that hits consumers at the cash registers.
Werman: Is it true, Gerry, that generally foreign goods are cheaper in Spain than Spanish-made goods?
Hadden: Yeah. That’s a result of what has happened essentially over the last decade. The cost of Spanish labor went way up during a decades long housing boom and that makes the cost of Spanish good more expensive. And so now some economists say that Spanish labor costs about 40 percent too much compared to say German labor. But yet we’re living in this global economy and there’s lots of very cheap goods entering Spain from other parts of Europe, from the US, but mainly from the emerging markets. So you find, you know, cheap goods in stores, but Spanish goods are more and more expensive and more and more difficult to sell abroad. The end result of that is that as a nation, you’ve got a country that’s spending more than it’s taking in.
Werman: As far as that huge unemployment number, how does that look actually in Barcelona? I mean what does 25 percent unemployment actually look like?
Hadden: It looks like very long lines down at the public unemployment offices and, interestingly, when I used to go into those offices from time to time to interview folks about the economy, there used to be long lines at the traditional windows where Spaniards were looking for jobs in Spain and then there was this sort of little office off to the side for the occasional Spaniard that spoke another language that was possibly looking to emigrate to another country, and now that’s where the big lines are. There are so many young Spaniards looking desperately overseas, either within the European Union or to Latin America where they share a language with most of the countries there, for work because there’s just no opportunity here.
Werman: Is there any good news at all right now, Gerry, in Spain economically?
Hadden: I wish I could tell you that there is, but, you know, today it’s just, is frankly a bad day, and I’ll add one more piece of bad news just to make it a really perky Friday. 1.3 million Spanish households now have nobody with a job at all, so those . . .
Hadden: . . . families, 1.3 million, are completely dependent on savings extended family, or on public welfare, but that money is slowly shrinking as well. So Spain really is in a situation where it needs to find some way to begin to grow.
Werman: The World’s Europe correspondent, Gerry Hadden, in Barcelona. Thank you for helping us keep our chin up today.
Hadden: Thanks again.
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