The unemployment rate hit another record high in April for the 17 countries in the eurozone, rising to 12.2 percent. That beat the 12.1 percent high in March. The area has seen record-breaking unemployment for many months now.

An additional 95,000 people were unemployed in April, according to Eurostat, putting the total number of unemployed workers at 19.38 million. If the current pace continues, the number of unemployed could rise above 20 million this year.

The eurozone economy has been struggling with growth. Its ongoing recession is now the longest in the history of the euro. The Organization for Economic Cooperation and Development (OECD) revised its growth forecast for the area on Wednesday from a slight 0.1 percent contraction to a 0.6 percent decline.

The economic pain has recently led eurozone leaders to back off of the austerity measures many believe have been a drag on the area’s growth. Italy, Spain, France, and Germany have been given a reprieve from some austerity rules imposed by the eurozone’s central government. Other European leaders have also called for a shift away from austerity.

The United States initially shied away from austerity, boosting the economy with President Obama’s stimulus package, which led to higher economic growth than in Europe. But the country has now embraced austerity, with government spending dropping, including sequestration’s automatic budget cuts. Those cuts are starting to be a drag on the country’s economic growth.

The number of black executives has dropped during the recession, and efforts to grow diversity in the workplace have diminished, according to a new report by the New York Times.

The statistics — which line up with a general trend of the financial dis-empowerment of black people since 2008 — show that a startlingly low and stagnant number of physicians and dentists are black, about 5 percent. That’s about the same percentage as it was in 1990. The same holds true for lawyers; the number of non-white, non-male lawyers dropped for the first time in 20 years in 2010.

As the Times reports, “The deep recession not only disproportionately hurt African-Americans in many fields, but it also led businesses to make diversity programs less of a priority.” This, combined with the looming Supreme Court decision on affirmative action programs that may boost black education, employment, and leadership opportunities, poses a huge threat to an already-threatened racial group.

Black workers have suffered disproportionately during the Great Recession. Black unemployment spiked with the housing crash in 2008, and has remained outrageously high since. At the same time, the racial wealth gap has widened, with white people holding average assets up to six times that of black people.

Even in a broader context, beyond the recession, black employment numbers are abysmal: For most of the last 50 years, blacks have suffered unemployment rates over 10 percent.

Two weeks after announcing a record high unemployment rate, Europe’s official economic analysts today revealed another first for the currency union: The Eurozone’s ongoing recession is now the longest in the 14-year history of the euro. The Guardian notes the European economy has now shrunk a full percentage point over the past year:

The eurozone has slumped into its longest recession ever, after economic activity across the region fell for the sixth quarter in a row. […]

France, Spain, Italy and the Netherlands all saw their economies shrink as the economic crisis in the eurozone continued to hit its largest economies.

Eurostat’s figures showed that the eurozone economy has now contracted by 1% over the last year, putting further pressure on leaders as unemployment climbs to new record highs.

The 0.2% contraction in the first quarter of 2012 was an improvement on the 0.6% drop recorded between October and December, but analysts warned that the eurozone’s economic outlook is darkening.

This is the second ugly bit of record-setting in two weeks, after the Eurozone’s unemployment rate hit 12.1 percent at the end of April. It was the 23rd consecutive month of record-breaking unemployment, with 26.5 million people out of work.

These records seem to have created some space for European policymakers to begin at least discussing an end to austerity. For example, French finance minister Pierre Moscovici reacted to the news that France’s economy had contracted for the second straight quarter by calling for pro-growth policies to return across the Eurozone.

So far, however, the damagingly aggressive reduction in deficits is projected to continue in Europe. And American deficits are now projected to dip even more dramatically than those in Euro countries.

The drop in aggregate Eurozone deficits looks alarmingly similar to the rapid decline in U.S. deficits CBO now projects for 2013. According to European Commission projections for 2013, the countries that use the euro will have cut their combined deficits to 2.9 percent of GDP by the end of the fiscal year, down from 6.4 in 2009. The new CBO figures predict U.S. deficits are shrinking even more dramatically, to 4 percent this fiscal year from over 10 percent in 2009.

In other words, as Europe’s deficit-slashing fever produces a record contraction, American policymakers are learning they’ve outdone their Old World colleagues. But where Europe’s outright contraction may be forcing a policy reversal, slow but steady economic growth in the U.S. seems to be obscuring the lessons from bad headlines across the Atlantic.

It hasn’t really made the front pages, but the United States recently began carrying out a massive and nearly unprecedented economic experiment, and 2013 looks to be the year when the results come in. The question is straightforward: When the economy is in a deep slump, and the government makes things worse by cutting spending, how much can monetary policy do to help? The answer could reshape the way we argue about economic policy, with profound implications for progressives’ economic priorities — and big opportunities, if they can seize them.

First, a quick refresher. Just like blood carries nutrients to the cells of the body, enabling them to function, the flow of money through an economy enables people to keep buying, selling, and earning incomes. Keeping the supply of money in line with the economy’s changing needs is the job of the Federal Reserve, and normally it does so by adjusting interest rates. Raising them sucks money out of the economy and reins in inflation. Cutting them pumps money into the economy, boosting wages and job growth. And most of the time, most economists agree this is the primary tool for guiding the economy out of its periodic slumps.

But with the 2008 crash the United States entered largely uncharted economic waters, and that agreement blew apart. That’s because the Great Recession was so deep that cutting interest rates all the way to zero still wasn’t enough to boost the economy into a recovery. Economists call it the “zero lower bound.” And while it’s a wall that modern western economies don’t hit often, 2013 will be the fifth year running the United States has been up against it.

So far, progressives have tended to side with economists like Paul Krugman and bloggers like Mike Konczal. They argue that monetary policy is severely weakened at the zero lower bound, when government must take over the job of pumping money into the economy by borrowing and spending. They point out that economic growth was a measly 2.5 percent for 2013’s first quarter, and market data suggests the Fed has failed to convince anyone it’s willing to let inflation get unusually high before it hits the brakes. This despite multiple rounds of “quantitative easing,” an attempt by the Fed to get around the zero lower bound by purchasing huge numbers of financial instruments, thus injecting money into the economy

But economists like David Beckworth and Scott Sumner countered that the economy’s 2.5 percent growth rate stuck around despite blows from multiple rounds of spending cuts, the European crisis, and worries about China. In fact, as Beckworth pointed out, government spending began shrinking by the start of 2010 — yet the economy just kept puttering along at 2.5 percent.

Other points in Beckworth and Sumner’s favor: Before sequestration, the latest round of across-the-board spending cuts, began, the group Macroeconomic Advisors projected growth for the first quarter below 2.5 percent if sequestration didn’t happen. Then the May 3 jobs report, which came out after Konczal’s piece, was so good it was almost shocking. Matt Yglesias and Ryan Avent, two other fans of monetary policy’s salutary effects, pointed to other data sources that suggest the Fed actually has been able to raise long-term inflation expectations.

So this looks like at least a preliminary win for team monetary policy. Granted, the evidence is also very preliminary. Getting economic data in real time is tough, and the full force of sequestration still hasn’t hit. So at a minimum, we won’t have a better idea until at least the second half of this year. But there’s a real possibility monetary policy has put a floor under economic growth — despite the government’s demented insistence on spending cuts and sequestration — and might even be able to do more if the Fed gets more ambitious.

So what if QE3 continues apace, sequestration remains in effect, and economic growth just keeps chugging along around 2.5 percent? What should our take-away be?

Well, Beckworth and Sumner tend to be fans of austerity and small government, for obvious reasons: if fiscal drag can always be offset by monetary policy, why not cut away? But this logic can be turned on its head, because recessions drive up spending and drive down revenues, even when policy itself remains unchanged. Far more than the real-but-modest imbalance between tax and spending left by the Bush presidency, the 2008 crash is what drove the federal government deep into the red. Employment and incomes dropped, so tax receipts dried up. But more people became impoverished and unemployed, thus qualifying for safety net programs, meaning spending automatically increased. Conversely, nothing balances a budget like economic growth. If monetary policy really has the power to guide us back out of even the steepest recession, then that is the way to reduce deficits, not austerity.

Progressives need to make monetary policy something politicians have to answer for. The Fed’s policy is set by the 12 voting members of the Federal Open Market Committee (FOMC), seven of whom are appointed by the president and confirmed by the Senate. This process, and the views on monetary policy of the people who are appointed by it, deserves every bit as much scrutiny from activists, organizations, and politicians as Supreme Court nominations. Republicans and Tea Partiers have relentlessly warn of runaway inflation and denounced quantitative easing, even in the midst of the slump. But outside a rarified group of bloggers, there’s been no serious pushback from the left, or even any real sense that monetary policy is understood as a specific issue worth getting mad about.

Unfortunately, the other five voting members are not vetted by democratically elected officials, and are instead drawn from the Fed’s district banks. That means they come from a social and professional milieu likely to bias them in favor of the worldview of the financial industry, business owners, and the wealthy. Those groups all have vested interests in minimizing inflation while ignoring job growth.

Still, the Fed’s recent announcement — that quantitative easing will be open-ended, with an eye to getting unemployment below 6.5 percent, and allowing inflation to go as high as 2.5 percent — was step in the right direction. But the inflation threshold is too low. Arguably, 4 percent would better balance stable prices with the need for job growth. The Fed is also limiting its purchases to the same amount every month: $85 billion. It’s hinted it might start varying that based on how it reads the economy’s needs, and progressives should pressure it to do so. As Beckworth put it, buying the same amount every month is like putting the same amount of pressure on the gas pedal, no matter what sort of terrain you’re driving over.

Finally, we need a wholesale reform of the way the Fed does business, making the institution more accountable to the needs of everyday working Americans. The simplest way, as Matt Yglesias recommended, would be to cut the five un-appointed members out of the FOMC’s decision-making process. That, or find some other way to bring the entire board under direct accountability to elected officials.

The Fed’s mandate could use a touch up as well. Right now, it merely instructs that inflation be kept down, and employment be kept up. All the Fed’s actual targets are of its own devising, and it can change them as it sees fit. It’s not obvious when economic trends are above or below where the Fed wants them to be, or how it intends to move in response. So Fed watchers pour over its pronouncements in a recurring act of glorified tea leaf reading, parsing the statements for clues of intent or disagreement amongst the FOMC members.

The process is so absurdly vague that, as Konczal noted, the bursts of news from the FOMC’s internal divisions undermine the Fed’s ability to credibly promise sustained monetary stimulus. In the vacuum of certainty, economic players often assume the Fed will put the brakes on the economy as soon as inflation begins to tick up. (There’s that bias in favor of the wealthy again.) The Fed’s targets and its obligation to hit them should be explicitly given to it by law. That could be an explicit inflation target, or a nominal gross domestic product target — which combines the level of inflation and GDP growth — as Sumner and Beckworth have suggested.

Zooming back out to the big picture, the fact is that the political forces pushing for fiscal austerity are the same ones pushing for monetary austerity. Movement in progressives’ favor on one issue is likely to bleed into the other. So while Krugman was wrong to dismiss the case for monetary policy as quickly as he did, his final conclusion was right: we should be throwing every policy tool we’ve got at the economic slump.

It’s just that up until now, progressives haven’t been giving monetary policy the respect it deserves. 2013 is the year they should start.

America’s budget deficit is shrinking at a faster pace than at any time since World War II, and it is now projected to fall below 5 percent of GDP this year, 3 percent of GDP in 2014, and 2 percent of GDP in 2015, according to a Potomac Research report released Wednesday. That may please Washington politicians who have ignored jobs and unemployment over the last three years, but it isn’t good for the economic recovery.

The immediate deficit reduction efforts Washington has pursued repeatedly since Republicans took control of the House of Representatives in 2011 have in fact dampened the economic recovery, economists told the New York Times, and without the spending cuts and tax increases enacted in the last three years, unemployment would be a full-point lower and economic growth two points higher:

The nation’s unemployment rate would probably be nearly a point lower, roughly 6.5 percent, and economic growth almost two points higher this year if Washington had not cut spending and raised taxes as it has since 2011, according to private-sector and government economists.

After two years in which President Obama and Republicans in Congress have fought to a draw over their clashing approaches to job creation and budget deficits, the consensus about the result is clear: Immediate deficit reduction is a drag on full economic recovery.

Hardly a day goes by when either government analysts or the macroeconomists and financial forecasters who advise investors and businesses do not report on the latest signs of economic growth — in housing, consumer spending, business investment. And then they add that things would be better but for the fiscal policy out of Washington. Tax increases and especially spending cuts, these critics say, take money from an economy that still needs some stimulus now, and is getting it only through the expansionary monetary policy of the Federal Reserve.

The spending cuts have been especially damaging, as they have made up the vast majority of deficit reduction efforts since the end of the Great Recession. Modest tax increases targeting the wealthy went into effect at the beginning of 2013, but it is the expiration of the payroll tax holiday, which will raise taxes on the median American family by roughly $1,000 this year, that will hurt the recovery, the economists and analysts said. Nonpartisan reports have said the income tax increases on the wealthy would do little to affect growth.

That deficit reduction is holding back the recovery should not come as any shock. The stimulus bill President Obama signed into law in 2009 put the U.S. on a path to recovery that far outpaced the austerity-laden European economies, but as focus has turned to deficit reduction, growth has turned tepid. While rises in government spending have traditionally added to growth and pulled the U.S. out of economic downturns, it has plateaued since 2010, hampering recovery efforts this time. Reduced spending, in fact, “has detracted from growth in five of past seven quarters,” one investment bank wrote in a midyear report this week.

Republicans have blocked efforts, such as Obama’s American Jobs Act, that would have further stimulated the economy. That legislation would have led to the creation of a million jobs and added to growth, according to independent analysts, and would have aided states and local governments and federal agencies that have laid off more than 500,000 public employees, many of them teachers and public safety workers, since the end of the recession. With government borrowing costs at historic lows and unemployment still high, it’s that sort of shot in the arm the economy needs. But after Congress let sequestration, the damaging budget cuts that could wipe another 700,000 jobs out of the economy, take effect in March, it is now focused on finding even more deficit reduction in the immediate future.

Weekly jobless claims, the number of new workers filing for unemployment benefits, fell 18,000 to 324,000 for the week that ended April 27, the lowest level since the beginning of the Great Recession. The five-year low shows that even as employers remain hesitant to expand hiring, they are laying off fewer workers.

The number came in well below expectations and comes a day before the April employment report, which is expected to show that the economy gained 145,000 jobs last month. The Federal Reserve announced yesterday that it will continue its bond-buying and monetary easing to help bolster the recovery, and it may do more in the future if job growth remains slow.

Even as new unemployment claims reached their lowest levels since the beginning of the recession, the long-term unemployed are facing challenges brought on by budget cuts at the state and local level. There are 4.7 million Americans who have been out of work for at least six months, but multiple states have cut eligibility for unemployment insurance, rendering many of the long-term unemployed ineligible for federal benefits. And sequestration, the automatic budget cuts that went into effect on March 1, has led to bigger reductions in long-term unemployment benefits — and could result in more — at a time when those workers are facing a discriminatory hiring environment that has made it nearly impossible for them to return to work.

Eurozone-area unemployment, still plagued by a continent-wide push for austerity, rose to yet another record high in March, and 12.1 percent of Europeans are now unemployed. Spain’s economy contracted for the seventh consecutive quarter in the first three months of 2013, and across the continent, growth is stagnant. Even Germany, home to Europe’s strongest economy and its biggest deficit hawk in Chancellor Angela Merkel, is seeing higher unemployment.

That has led European leaders to rethink their focus on austerity, largely at the urging of American officials. European officials pledged to rein in austerity efforts earlier this month, and European Union president Jose Manuel Barroso said last week that the EU was considering easing its austerity policies and deficit reduction targets to help boost growth. Others have gone farther, with officials in France and Italy calling for total abandonment of austerity, the Washington Post reports:

In France, the doubts have spread to President Francois Hollande’s Socialist Party and government, with officials suggesting that the debt-ridden continent needs to stimulate growth at all costs — even including more debt — if it is to climb out of the economic and financial crisis that began unfurling in 2008. [...]

“Italy is dying because of austerity alone,” that country’s new prime minister, Enrico Letta, complained in his first address to Parliament on Monday. “Stimulus policies can no longer wait.”

European leaders haven’t yet abandoned austerity to focus on growth that would help countries like Spain and Greece — where unemployment rates top 25 percent — but they are at least considering it. But even as the U.S. pushes those reconsiderations, lawmakers here remain focused not on growth that would help reduce America’s own persistently high unemployment rate but on reducing deficits and debt. Sequestration, the automatic budget cuts that went into effect on March 1, is America’s most irresponsible form of deficit reduction yet, and despite its gutting of vital programs and its harmful effects on economic growth, Republicans in Congress have shown no willingness to abandon it in favor of policies that would actually help the economy.

The U.S. bucked the European trend toward austerity in 2009, when President Obama signed a large stimulus bill into law that halted the recession and turned the economy around. The stimulus put the U.S. on a faster pace of growth than Europe experienced, but the focus on deficit reduction since then has only prevented the recovery from taking full effect. Though government spending has typically driven economic recoveries in the United States, it has plateaued amid deficit reduction efforts and perpetual manufactured crises (like the 2011 debt ceiling debacle) since 2010. Instead of helping the recovery, those efforts have only hurt it. But even as some European leaders rethink austerity, and even with evidence that stimulative policies sparked a better recovery than Europe’s, American lawmakers remain committed to spending cuts that will only hinder efforts to grow the economy and reduce unemployment.

This morning’s report that the U.S. economy grew 2.5 percent in 2013′s first quarter wasn’t horrible, although it was still disappointing. But there was an even more discouraging number Americans should also pay attention to: inflation was a mere 1.1 percent.

While many think low inflation is a good thing, Johns Hopkins economist Laurence Ball published a new paper that argues two percent inflation, which American policy is currently targeting, is too low and that we should be aiming for four percent.

The key factor here is the Federal Reserve’s control over interest rates, which is an important tool for guiding the economy. When the Fed wants to boost the economy out of a recession, it cuts interest rates. When it wants to rein in inflation, it raises them. And for the last two decades, it’s done very well at keeping inflation to a historically low two percent.

That’s doing more harm than good, according to Ball, because it prevents the Fed from fighting economic slumps. The Fed can’t cut interest rates below zero, so there’s a floor on how much help it can provide in a depression, called the “zero lower bound.” And if the Fed keeps inflation low over the long-term, that will leave it less room to cut rates when another recession hits. Ball found the zero lower bound held Fed policy far back from where it should’ve been after the 2008 crash. He also looked at seven other recessions since 1960; in three of them, if inflation had only been two percent, the Fed would’ve also hit the zero lower bound.

Ball calculated that if inflation had been 4 percent going into 2008, giving the Fed two extra percentage points to cut from interest rates, the resulting shot in the arm would’ve increased the size of the economy by 5.9 percent in 2013. More importantly, the unemployment rate would be five percent instead of 7.6 percent — meaning just over four million fewer Americans would be out of work.

Furthermore, history shows that four percent inflation isn’t particularly dangerous. After reviewing the literature on high inflation across countries, Ball concluded genuine economic damage didn’t happen until the rate hit 8 percent. The calamitous inflation Americans remember from the 1970s, for example, peaked at 12.5 and 15 percent. As Matt Yglesias once quipped, Ronald Reagan’s “Morning in America” economic boom came with about four percent inflation.

Fears that the United Kingdom would fall into a triple-dip recession eased today, as the country avoided another quarter of economic contraction. GDP data confirmed that the country’s economy did in fact grow, if very slowly, at the beginning of this year:

During the first quarter of this year the country recorded an increase of three-tenths of a percent in gross domestic product, compared with the previous three-month period when it contracted by a similar amount, the Office for National Statistics said. Gross domestic product had been broadly flat over the last 18 months, the agency added.

The growth was driven in large part by an increase in output form the service sector, which grew by 0.6 percent, and from mining and quarrying, which increased by 3.2 percent. These increases were offset by a 2.5 percent decline in construction.

But the jump in growth was also aided by a slight change in policy focus away from deficit reduction. As the country’s leaders have slowed the drive toward austerity, the public sector began to grow instead of shrink. In the first quarter of the year, that sector grew by 0.5 percent, compared to a 0.9 contraction the quarter before, adding 0.1 percent to overall GDP growth.

This news contrasts sharply with figures out of Spain today, a country still struggling with the demand for austerity. The country continues to experience a recession, now for seven consecutive quarters. Its unemployment figure has climbed above 27 percent, a number it hasn’t experienced since 1976, the year its dictator Francisco Franco died. The public sector in Spain has increased firings in education and health to reduce deficits, causing employment in those sectors to fall to 2.85 million from 2.92 million at the end of last year. Private sector employment also fell from 13.9 million to 13.6 million.

Spain’s prime minister is looking to convince investors and other European Union countries to ease its deficit targets next month. He may find a friendly ear, as a top EU official recently indicated that he’s in favor of shifting the focus away from austerity and giving countries more time to reduce their deficits, and the EU’s economic and monetary affairs commissioner has voiced a similar opinion.