The Bureau of Labor Statistics (BLS) released the July unemployment rate this morning. The headline was that the rate dropped from 9.2% to 9.1%.
Some digging into the data shows that since 1948, the oldest data BLS has, there have been 45 months in which the unemployment rate has been 9% or higher. One occurred in the first Nixon administration, 19 occurred during the first Reagan administration, and 25 (or 55% of the total) occurred during the 31 months of the Obama administration.
The Obama administration looks better if we look at months in which the unemployment rate was 8% or higher. Nixon/Ford had 12 months, Reagan had 27, and Obama 30.
Both Nixon and Reagan won second terms. At this point in the Nixon administration the unemployment rate was 8.6% and it fell to 7.6% in September of election year, which would have been the last data available before the election. For Reagan the numbers were 9.4% to 7.3%.
Looking at the unemployment rate, the current situation seems much like what happened in the 1980s, though perhaps not as severe. However, a difference between now and then is that in the last few years we have had a large drop in the labor force. People have stopped looking for jobs and no longer are counted as unemployed. Looking at the employment data rather than the unemployment rate shows that the current downturn was much more severe than the two downturns in the 1970s and 1980s.
Employment peaked in January 1974 and then declined by 3.37% over the next 17 months. It took another 14 months to surpass the January 1984 peak.
Employment peaked in February, 1980 and declined by 3.82% over the next 36 months. However, it took only ten months from there to surpass the February, 1980 peak.
In our most recent downturn, employment peaked in March of 2007 and declined by 7.42% over the next 32 months. Nineteen months later we still have not reached the previous employment peak--we have regained only 22% of the jobs lost. The current downturn is almost twice as severe as the very serious downturn in the early 1980s based on the employment data.
(All numbers based on data from the BLS website.)
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