David Leonhardt clarifies: The current economic collapse is not yet “the worst since the Great Depression.” It won’t be the worst since the Great Depression until the end of the year.
NYT: [T]he 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.
So we’ve got that going for us. And here’s some more perspective. So stop talking about how the housing market collapse is “unprecedented” (home-builders, this means you). For now.
The first big blow to the economy was the 1979 revolution in Iran, which sent oil prices skyrocketing. The bigger blow was a series of sharp interest-rate increases by the Federal Reserve, meant to snap inflation. Home sales plummeted. At their worst, they were 30 per cent lower than they are even now (again, adjusted for population size). The industrial Midwest was hardest hit, and the term “Rust Belt” became ubiquitous. Many families fled south and west, helping to create the modern Sun Belt.
Nationwide, the unemployment rate rose above 10 per cent in 1982, compared with 7.2 per cent last month. But that rate has a couple of basic flaws, as I’ve discussed in previous columns. It counts people who have been forced to work part time, even though they want to work full time, as fully employed. It also considers people who have given up looking for work — so-called discouraged workers — to be no different from retirees or stay-at-home parents. They simply aren’t counted…
Including discouraged workers, the measure shows that the unemployment rate was 7.6 per cent last month. Another 5.2 per cent of the labour force was involuntarily working part time. These two groups bring the combined rate to 12.8 per cent…
As bad as the number is, it is still not that close to its 1982 peak of 16.32 per cent (or anywhere near its Depression levels, which were probably above 30 per cent). The early ’80s really were that bad.
Aren’t you encouraged?
Read David’s full article here >