Fear of unemployment peaks in Brazil

January 5, 2016

A man looks at lists of job openings posted on a pole in downtown Sao Paulo March 19, 2015. Mounting job losses are pushing more and more Brazilians into the informal economy as self-employed workers, leaving them vulnerable to what could be the country's worst recession in 25 years. REUTERS/Paulo Whitaker

Inflation over 10 percent, a record-low exchange rate, job losses all around. Can it get any worse for Brazil in 2016?

Economists still think it can, and will. But Brazilians may have started to feel tired of their amazingly long streak of bad news. A confidence survey conducted by the national industry confederation (CNI) showed Brazilians are slightly less scared about losing their jobs, and a bit more satisfied with their lives, than in the middle of last year’s nightmare.

It is not that people have suddenly realized money doesn’t matter and it’s time to carpe diem. The mood is still awful and confidence remains near record lows, very far from historical averages. But at least this indicator, unlike GDP, employment and other measures, has given a tentative sign it could be stabilizing, perhaps even bottoming out:

Fear of unemployment:

fear

Satisfaction with life:

life

Dissatisfaction with life and fear of unemployment are similar across age and income groups, although people with higher education reported they were more worried about losing their jobs than low-skilled workers. The improvement compared to a September survey was very general, however. Read the full survey (in Portuguese)

Brazilians will probably enjoy about one more month of very relative peace of mind, until Carnival, in early February. Congress will not resume its work until then, offering a truce in the political wrestling that has turned the economy upside down. But they better take this time to recharge their batteries, for what comes next looks like just as uncertain as last year, say economists: President Dilma Rousseff’s battle against impeachment; potential tax hikes; gradual expiration of unemployment insurance benefits; the run-up for the Olympics in Rio.

“It would be much better if Brazil could pass this year under the radar,” said Eurasia Group President Ian Bremmer during a conference call on Monday. The Olympics, he reckoned, will not be as smooth as the soccer World Cup, and Rio’s streets look more vulnerable to protests and road closures.

To see a light at the end of the tunnel, Brazilians will have first to defeat fear – and that’s the very small piece of good news in the survey. A proper recovery in business and consumer confidence will probably be the first concrete sign that a recovery is finally on its way, probably not until the political stalemate is somewhat solved in coming months.

As one economist told me, just before New Year’s Eve:¬†“I just wish you that this year may be worse… than 2017!”

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