Noam Scheiber: Be happy with 8 percent unemployment in 2012, America

October 7, 2009

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.

2 comments

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Americans have to get over their “expectations”. If anything, it was those “expectations” that got us into this situation.

Unemployment was kept artificially low over the past decade. If the new rate stands at 7% or 8% but Americans see increases in wages and interesting job opportunities, not jobs at McDonalds and Wal-Mart, then it would be an improvement. Number’s aren’t everything, its the quality not the quantity.

Posted by Greg | Report as abusive

Well, Americans also grew ‘accustomed’ to seeing the value of their homes rising indefinitely and ‘accustomed’ to driving giant SUVs two blocks to the store to buy junk they didn’t need. If we should take the EXTREME excesses of last five years and have the gall to call it normal then America is sunk already.

Also, I find it interesting that you bring up the economic malaise of the 70s and early 80s often. You’re always quick to point the finger at Jimmy Carter and hail King Ronnie as a hero. Never once have I heard you mention that most of the problems if Carter were inherited direct effects of the massive spending in Viet-Nam and a severe recession in 72 that was never fully wrought out. Granted, his policies weren’t the greatest, but he was handed a deck stacked against him. And King Ronnie didn’t really see any effects of his radical changes (re:Reaganomics) for a full 3 years! In fact, things got much, MUCH worse the first 30 months under Reagan; the only good thing to come out of 80-83 was Michael Jackson’s Thriller album.

If Reagan gets 30 months grace and is lauded a hero for his destructive policies, maybe Obama should get more than nine months to see how his turn out.

Posted by the Shah | Report as abusive