A Dose of Reality on Our Current Labor Market

There was a fantastic article written today in the Wall Street Journal written by Bradley Schiller that did a great job really qualifying the statements that our President has been making recently about the state of the economy and why we need to pass a $1T bail-out to keep us from financial demise.  

DISCLAIMER: I’m a staunch fiscal conservative (with a degree in Economics) and I struggle with a bail-out program that is going to “create or save 3.5 million jobs” as I don’t believe any sane Economist will be able to provide you with any effective formula for how to measure “saved” jobs.  I’m also a big fan of the WSJ as it’s about the only publication you can read any more without a blatant agenda. 

Back to the article.  If you’ve spent more than 5 minutes reading the news in the past year you’d truly think that the sky was falling if you didn’t have some kind of statistical baseline on which to compare what’s happened with what really occurred during the 30’s.  Here are some important ones: 

Unemployment: 

1932: 25.2%

1982: 10.8%

2009: 7.6%

 

Job Loss: 

2008: 3.4 million jobs lost or 2.2% of the labor force

1981-2: 2.4 million jobs or 2.2% of the labor force

1930: 4.8%

1931: 6.5%

1932: 7.1%

*No, that is not a rolling total for 1930-32, that was the number of positions lost in each year!

 

GDP Growth (Contraction):

1930: (-9%)

1931: (-8%)

1932: (-13%)

1982: (-1.9%)

Projected 2009: (-2%)

 

Bank Failures: 

2008: <50

1987-88: >3,000

1933: >10,000

 

I am not even going to try to summarize these data points as simply quoting what Mr. Schiller said is much more eloquent and concise:

“President Barack Obama has turned fearmongering into an art form. He has repeatedly raised the specter of another Great Depression. 

Mr. Obama’s analogies to the Great Depression are not only historically inaccurate, they’re also dangerous. Repeated warnings from the White House about a coming economic apocalypse aren’t likely to raise consumer and investor expectations for the future. In fact, they have contributed to the continuing decline in consumer confidence that is restraining a spending pickup.”

Author’s Note: one additional data point for those looking for a modern day bail-out comparison to The New Deal: from 1934-1940, government spending increased by 45%.

If you’re a history buff you’ll recognize something: in 1940 we were still in The Great Depression.

Tags: 1930's, barack obama, bradley schiller, consumer confidence, contraction, FDR, fearmongerer, fearmongering, GDP Growth, great depression, investor confidence, job loss, new deal, the great depression, unemployment, unemployment reate, wall street journal, wsj