The Economy Is Bad, but 1982 Was Worse

I thought it would make sense to get some clearer historical perspective, and the economists at the Bureau of Labor Statistics (BLS) were nice enough to help me do so. In the last week, they helped me put together a broad measure of the job market — one including both official unemployment and more subtle kinds — stretching back to 1970. Since the job market covers the entire economy and affects families in tangible ways, it seems to be the single best yardstick.

And it shows, for starters, that the economy is not yet as bad as it was in the early 1980s. It’s not even that close to being as bad. The ranks of unemployed and underemployed, controlling for the size of the population, were much larger in 1982 than today.

I took estimates from the Labor Department and created a measure of unemployment that goes back to 1970. Including discouraged workers, the measure shows that the unemployment rate was 7.6%. Another 5.2% of the labor force was involuntarily working part time. These two groups bring the combined rate to 12.8%.

Even this is an understatement, because the Labor Department’s definition of discouraged workers is a little narrow. To be counted, somebody must have looked for a job in the last year. And there appear to be several fhundred thousand people — mostly men — who stopped looking for work more than a year ago but would gladly take a good-paying job if one came along. They would lift the rate above 13%.

As bad as the number is, it is still not that close to its 1982 peak of 16.32% (or anywhere near its Depression levels, which were probably above 30%). The early 1980s really were that bad.

~David Leonhardt in today's NY Times

MP: As I reported earlier, some of the other key differences between today and the early 1980s are:

Prime Rate
1981: 20.5%
2009: 3.25% (Current)

Inflation
1980: 14.8%
2008: 0% (December)

Unemployment Rate
1982: 10.8%
2008: 7.2% (December)

30-Year Mortgage Rate
1981: 18.5%
2009: 4.96% (Current)

Real Gas Price (2008 dollars)
1981: $3.45 per gallon
2009: $1.82 (Current)