Tom Blumer has been noting the failure of the current “recovery” versus the recovery from the 1981-1982 recession for some time. Before I take you to the main event, I do encourage you to look at the latest from Tom; he also explains how the “103,000 jobs added in September” isn’t quite all in September.
This morning, The Wall Street Journal jumped on board this train, with a front-page story (unfortunately, behind the paywall), a banner companion must-see graphic (fortunately, not behind the paywall), and a little look at the third Septbembers of Ronald Reagan’s and Barack Obama’s terms. The devastating part:
As it happens, the biggest one-month jobs gain in American history was at exactly this juncture of the Reagan Presidency, after another deep recession. In September 1983, coming out of the 1981-82 downturn, American employers added 1.1 million workers to their payrolls, the acceleration point for a seven-year expansion that created some 17 million new jobs.
Bear in mind that is, depending on whether one measures the end of the 1981-1982 recession as October 1982 or November 1982, a mere 11 or 10 months (respectively) after the end of the recession, while we’re in the 27th month of “recovery”. The similar point in this “recovery” is either April 2010 or May 2010. April 2010 saw a seasonally-adjusted job growth of 277,000, and May 2010 saw a seasonally-adjusted job growth of 458,000.
The bigger problem is what happened after that 10th/11th month of recovery. The next month after that point in the 1980s where there was job contraction was June 1986, and after that, July 1990. Meanwhile, June 2010, July 2010, August 2010 and September 2010 all saw job contraction.
[…] In September 2011, the economy, pending revisions, added 103,000 seasonally adjusted jobs (well, 58,000 after subtracting out Verizon workers who walked off the job in August and returned last month). In September 1983, the economy added just over a million jobs (HT No Runny Eggs). […]
This recovery, (if it is one) will be longer than any of those in the past save, perhaps, the ’30’s.
It’s a “bank”-based (or financial) recession; they simply are more awful and painful than others.
Of course, Obozo and Bernake’s Fed haven’t helped. Aside from ObozoCare and the cascade of regulations, there is a specific problem: he’s trying to ‘help’ the banks recover by crushing their carry-trade interest earnings. How? Simple.
Bernanke has pushed the 10-year USBond rate to almost zero. (T-Bills are at virtual zero.) Banks can borrow from the Fed and invest in USBonds or bills–but the spread is now only about 2% or less. Meantime, FDIC (et al) are demanding that banks make ONLY ‘ultra-clean’ loans. Finally, when Congress caved to WallyWorld on the debit-card charges, the Banks lost another revenue-stream.
Meantime, Obozo mortgages the country’s future with excessive debt. Consumers aren’t stupid; they realize that sometime in the future, taxes are going up. That, along with their no-longer-extant home equity, tells them not to spend unless absolutely necessary–and even then, to minimize.
This goes back about 30 years, of course. The borrow-and-spend of all Gummints has effectively reduced demand NOW by prior spending. Same applies to consumers.
The snake has to digest the elephant of debt; it will take a long, long time.
“Meantime, Obozo mortgages the country’s future with excessive debt.”
Reagan did the same thing. The data is clear. Yet you’re trying to make the argument that consumers didn’t care in the early 80’s but they do now. You can’t have it both ways. Either the government is creating uncertainty via spending or it isn’t in both cases.
Of course, the WSJ leaves out the fact that the recession of the early 80’s was almost completely Fed. induced in order to shake out parabolic inflation expectations caused by commodities shocks/shortages during the 70’s. This one is a 30’s style debt deflation recession/depression. That’s not really debatable at this point. The WSJ doesn’t draw the obvious distinction because, to the WSJ, cutting taxes for rich people is a universal solution to high unemployment. This shouldn’t be a surprise. Look who they sell papers to.