10.2% Unemployment: 1983 and 2009

By: Jill Schlesinger
Topics: Financial Decoder

This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.

I love this chart (see here) from this morning's Wall Street Journal article. It's a quick comparison between today and 1983, which was the last time the unemployment rate was 10.2% (and the last time I was considered a formidable power forward on the basketball court).

The unemployment rate's the same, the stock market bounce is close and Michael Jackson was in the headlines, but after that, lots has changed 26 years hence. Specifically, stocks are more expensive, the cost of borrowing is lower, inflation is nowhere to be found (at least for now) and Americans owe a boatload more money.

The last part of that laundry list disturbs me. While everyone was hyper-focused on the jobs report, later in the day, the Fed said consumer credit fell $14.8 billion in September (a 7.2% annual rate). It was the eighth straight monthly credit decline.

Of course this makes sense - for two decades, Americans binged on cheap credit and now find themselves in a pickle. But the overall debt level remains stubbornly high. Until household debt as a percentage of disposable income regresses to the mean, there's likely to be a continued drop in demand for new borrowing. It also means that the average American is going to be digging out of this mess for a long time.

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(CBS)

Jill Schlesinger is the Editor-at-Large for CBS MoneyWatch.com. Prior to the launch of MoneyWatch, she was the Chief Investment Officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.

Jill Schlesinger
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Jill Schlesinger, CFP®, is the Editor-at-Large for CBS MoneyWatch. She covers the economy, markets, investing or anything else with a dollar sign. Prior to the launch of MoneyWatch in 2009, Jill was the chief investment officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.
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by RandomUser1886 November 10, 2009 10:38 AM EST: Can Obama get the Unemployment Rate to 20%?
Yes He Can.; Reply to this comment


by MPHgrad November 9, 2009 3:30 PM EST: brianbwb-2009

Great analysis.; Reply to this comment


by brianbwb-2009 November 9, 2009 3:20 PM EST: The author makes a valid point, but also continues, like other "trickle downers" to fail to make the obvious connection between rising unemployment, and increasing use of credit to obtain the necessities of life.

Marcus Garvey seems now like a prophet, he said that "...Credit is the first step back to slavery...", and the correct conclusion by the author of this article bears witness to the truth of Garvey's warning.

However, to dismiss this as "binge borrowing" is to suggest that, like other binges, (eating, consuming alcohol, etc.) those who turned to deficit spending after becoming one of those 10.2% of unemployed did so as an unnecessary option, when in truth it was a non-option last resort.

The author might also consider that the 10.2% figure released does not cover those who gave up during Reagan's "jobless recovery", because they were unable to find work for the period of time which qualifies their numbers to be dropped from the count.

According to figures released by the Department of Labor, the real marker of American unemployment stands at 17.5 percent -- a figure which takes into account under-employed workers and those who have not sought work in the last four weeks, according to a published report.

The author claims to have been a formidable power forward, I would posit that such a person remember that the player knows what is really going on "on the court", far more accurately than the "newspaper sports editor".; Reply to this comment