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1982: Are We There Yet?
With the economy rapidly sinking and unemployment rising, many are asking whether we can
call this the worse recession since the Great Depression. Of course the peak unemployment rate of 10.6 percent in 1981-82 recession is still higher than anything we have seen to date, and hopefully will see going forward.
However, the gap is not quite as large as it appears. Much of the difference is explained by the aging of the workforce and some is explained by the growing tendency of the Census Bureau's survey to miss people who are more likely to be unemployed.
When we adjust for these factors, the 8.1 percent unemployment rate in February, would be 9.5 percent, only a bit below the 9.7 percent year round average in 1982.
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In a kinda related point, I was jarred last night by Obama's dire language on Leno. I guess I've been looking for him to start toning it down and start to talk about only optimistic things from now on. I like Clinton's line about "People that bet against America, always lose." Hopefully Barack will start to put his charm and smile to good use soon by blunting this Depression talk and providing some perspective like Dean's post above...
March 20, 2009 12:33 PM | Reply | Permalink
Wouldn't it be useful if there was something, anything, in the realm of economic jargon that meant the same thing as the everyday meaning of the same words, insofar as those words even have an everyday meaning?
So now unemployment is either 8.1% or 9.5%, and this means the current recession is almost tied with 1982 for "worst since the Great Depression." Unemployment has an everyday meaning, recession doesn't, and neither word is likely to convey to the average reader what it conveys to Dean Baker, one of the few economists who has actually been right about anything lately.
Even the most excellent economists are constantly having problems with the jargon, and Paul Krugman, another lonely member of the Dean Baker "right about something" school of economics, says "I think quantitative easing (it’s really qualitative easing, but I give up on trying to fix the terminology) is the right way to go."
Enough with this jeremiad, and now... a question for Dean Baker, whom I imagine hovering over his keyboard just waiting to answer a query from some economic illiterate:
Interest rates are so close to zero that the usual neo-Wicksellian games with money supply don't work, for the banks, but...
What about the rest of us?
If you increase my money supply, and lower my interest rates to zero on my mortgage, it would for damn sure have a noticeable effect on me.
So why is Team Obama still trying to get a pulse out of stone-dead banks, and inventing ever more exotic ways to resuscitate those corpses, when the rest of us who are actually still alive continue to pay interest that's way higher than the bank premium, and we could actually use an increase in our money supply and some relief on the interest we still pay the banks?
Forget the dead middlemen! Stimulate us, instead of an economy that nobody can even describe without incomprehensible jargon!
March 20, 2009 1:37 PM | Reply | Permalink
Hey Dean!
There's actually an apparently simple question in the previous comment!
Are you listening?
March 20, 2009 1:57 PM | Reply | Permalink
Mr. Baker,
If you're interested in some very sobering information, I'd suggest you check out Matt Taibbi's latest article in the Rolling Stone.
I might add that one should sit for this and have a handy very stiff drink at the ready. I believe Taibbi may provide some more information on your question of "how close are we...."
Taibbi has done a fairly thorough job of analyzing how the whole issue with AIG evolved, the key players and how so much has yet to be done to get us out of this mess.
After reading this, I think we're getting closer and closer...
http://www.rollingstone.com/politics/story/26793903/the_big_takeover/1
March 20, 2009 4:50 PM | Reply | Permalink
I'm getting quite tired of rehashed analyses.
How about some facts on which we can synthesize a constructive response to the current apparent snafu?
March 20, 2009 5:00 PM | Reply | Permalink
eds,
sure, lets start with Reagan when he put the sharks in the water and who's numbers have grown until today when they now permeate our business community.
"Government is the problem" my ass.
March 21, 2009 10:18 AM | Reply | Permalink
Don't listen to eds.
Any piece by Matt Taibbi is worth linking to. One of my favorites --
Thomas Friedman in possession of 500 pages of ruminations on the metaphorical theme of flatness would be a very dangerous thing indeed. It would be like letting a chimpanzee loose in the NORAD control room; even the best-case scenario is an image that could keep you awake well into your 50s. New York Press 4/26/2005
Thanks for the link, beltwayskeptic.
March 20, 2009 7:48 PM | Reply | Permalink
Ellen,
agreed, Taibbi is a great reporter and commentator.
March 21, 2009 10:19 AM | Reply | Permalink
Unemployment is hardly the only measure of interest here.
Shadowstats would say unemployment is a lot higher.
March 20, 2009 4:59 PM | Reply | Permalink
Read it ASAP!
March 21, 2009 1:30 PM | Reply | Permalink