10.2% Unemployment: 1983 and 2009

I love this chart from this morning's Wall Street Journal. 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.