No austerity miracles. (You've been lied to, repeatedly.)

If Ireland represents the fiscally responsible nation, then I hope the US never becomes as fiscally responsible as Ireland.

In order to make some visual sense of employment trends, I adjusted the employment rates of selected nations, and created an index, where Q1-2008 = 100.  It is not a perfect means of telling the whole story, because it does not take into account the baby-boomer retirement wave (US figures are not cut off at age 64 but the EU's figures are), so some might read the index incorrectly.

A quick look and you can see that Ireland is at the bottom, and Spain, Greece and Portugal are hoping to join it in economic despair.  A second look shows that Spain and Ireland followed practically the same path with large job destruction.  It so happens that both Spain and Ireland embarked on early austerity.  Coincidence?  I think not!  A third look and you'll notice that the US and UK somewhat mirror each other...dropped a bit, but then hasn't really grown -- that's a topic for another day.

Back to Ireland.

A superficial look would suggest that Ireland has hit something close to a bottom.  But that's not exactly the case.

I created two indices of population growth to illustrate my suspicion: one where the year 2000 = 100, and a second one where 2008 = 100. You can see population growth accelerating in Ireland, ahead of the UK and US, during the economic (banking) boom. In the second index, you can see that suddenly that population growth has slowed dramatically.

It should be somewhat obvious, Ireland has not bottomed out in the employment rate -- it is a result of slowed population growth due to people leaving Ireland.  To confirm the migration pattern, I checked Eurostat and it shows that Ireland lost a net 60,000 residents in two years (2009 and 2010), compared to a net peak gain of 66,000 in 2006.

And there you have it: No Irish Miracle and austerity does result in a deepening economic crisis when the economy is not in a good mood.

Sources of data: Eurostat, BLS and US Census Bureau.  Sorry no links...go find them yourself!  :D