This recession is more like the 1980s than the 1930s

In today’s NYT, David Leonhardt digs up some obscure Labor Department statistics to document something I’ve been touching on in this blog: So far, at least, this recession can only be said to be the worst since 1982.

Including discouraged workers … the unemployment rate was 7.6 percent last month. Another 5.2 percent of the labor force was involuntarily working part time. These two groups bring the combined rate to 12.8 percent. … And there appear to be several hundred 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 percent.

As bad as the number is, it is still not that close to its 1982 peak of 16.3 percent (or anywhere near its Depression levels, which were probably above 30 percent).

Now this recession isn’t over yet. By the time that it is, I wouldn’t be shocked if unemployment had surpassed its 1982 levels—making this the worst economic downturn since the Great Depression. Still, all indications are that it’s much closer in severity to the deep recessions of the mid-1970s and early 1980s than to the complete disaster that was the early 1930s.

The financial crisis of the past couple years has been more like that of the 1930s than anything since. But the government response—however bungled and expensive it’s been—seems to have kept the economic damage within bounds. So far.

baconbacon

Say we call the beginning of the GD to be Oct 1929. The UE rate was under 9% at the end of 1930. It was still under 16% at the end of 1931 and doesn’t peak until 1933. If we used the peak of the market as the beginning of this financial crisis (lazy but not totally unreasonable) we are talking Oct of 07. The UE rate in 1930 is very comparable to that at the end of 2008. I don’t think there is any reason to believe this

“The financial crisis of the past couple years has been more like that of the 1930s than anything since. But the government response—however bungled and expensive it’s been—seems to have kept the economic damage within bounds. So far.”
tomlind

So if it’s in the range of severity of the 1980′s recessions does that make you question the level of fiscal response proposed to cure things?
rjkwahoo

So are recessions only determined by a lagging indicator such as, unemployment?
While the unemployment is similar to the 80′s: so is this recession in fact the same as the 80′s, as your headline seems to suggest?

The 80′s recession seems to be a FED caused phenomena.
So is 08 in fact the same as 82? Is just stating similar unemployment numbers as a fair representation of the two different time periods, or is this comparison of data pointless and not a real representation of what is going on?
So far, the unemployment numbers look similar, but what about other economic indicators? I bet that the other indicators do not look 82′.
plukasiak

Random thoughts…
_
So are recessions only determined by a lagging indicator such as, unemployment?
given the agressive way that corporate America cuts jobs to maintain profit margins, is unemployment still considered a lagging indicator?
_
The 80′s recession seems to be a FED caused phenomena.
good point. The Reagan recession was basically an intentional ‘reset’ of the economy that was caught in an endless loop of inflation/stagnation caused by the oil price shock of the seventies. This recession (and that of the 1930s) is far more “organic”;
_
another issue is the level of government employment — government was much smaller back in the 1930s (and the 80s), and by not factoring that in we get false comparisons. Is there a way to compare private sector employment/unemployment only?