Noam Scheiber: Be happy with 8 percent unemployment in 2012, America
Over at his TNR blog, Noam Scheiber wonders what unemployment will be when Obama runs for reelection, noting that IHS Global Insight predicts it will be 8.1 percent:
8.1 percent unemployment in 2013 means a bit higher than that when Obama stands for re-election in 2012. In case you’re wondering, the last time the unemployment rate was nearly as high just before an election was 1992 (7.6 percent in September of that year–probably the last unemployment statistic to sink in before Election Day), which didn’t work out so well for the incumbent. Other high election-year unemployment rates in recent decades: 7.5 percent (September 1980) and 7.6 percent (September 1976), which also don’t appear to have helped the incumbent party’s cause.
On the other hand, it’s probably all somewhat relative. The 7.6 percent unemployment rate in September 1992 was pretty close to the peak of 7.8 percent from that business cycle, whereas 8.3 or 8.4 percent unemployment in September of 2012 would be substantially lower than the peak from this business cycle. By way of comparison, the unemployment rate stood at 7.3 percent in September 1984, but that apparently qualified as “morning in America” after a peak of 10.8 percent in 1982.
Me: One thing that Scheiber fails to grasp is that an 8 percent unemployment rate is roughly double what Americans have grown accustomed to in recent years. You could argue that 7 percent unemployment back in the early ’80s seemed more like a return to normalcy.
Americans then just came out nearly two decades of economic disruption. Americans today, a generation of prosperity. Expectations are different. Plus, unemployment has risen more than 5.4 percentage points from its cyclical low during this recession vs. 3.6 points during the early 1980s recession.