Over the course of the business cycle, in both good times and bad, minority unemployment rates tend to run significantly higher than the national average. Economists have determined that a variety of factors contribute to that persistent disparity, including educational levels, work experience, and proximity to available jobs.
For instance, the momentum in the credit-to-GDP (gross domestic product) gap has been stronger in Germany than in other European countries over the past years (Figure 4). Recently, the upswing in the financial cycle has levelled off. Several indicators suggest that future macroeconomic risks have been underestimated during the past years. One example are banks’ internal risk models.