WASHINGTON, March 9, 2009
U.S. Headed For Longest Post-War Recession
While Unemployment, GDP Are Not As Bad As 1981-82, Economic Pain More Widespread
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Play CBS Video Video When Will The Recession End? Financial experts Peter Morici, David Wyss, and Jill Schlesinger speak with Erica Hill about the growing U.S. unemployment rate and provide a financial forecast to a predicted end of the recession.
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Video U.S. Job Fairs Galore With millions of layoffs occurring over the span of just the last few months, many Americans are now struggling to find any source of income in this recession. Priya David reports from Rye, New York.
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Video Unemployment Keeps Rising As unemployment continues to rise, stock prices are hitting levels not seen in more than a decade, reports Priya David. Maggie Rodriguez talks to financial expert Doreen Mogavero.
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In this Feb. 11, 2009, file photo thousands of people line up at a federal government job fair in downtown Atlanta. (AP Photos/Journal Constitution)
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Map Unemployment Check Maximum weekly unemployment benefits paid by each state.
It wasn't the Great Depression. It was the 1981-82 recession, widely considered America's worst since the depression.
That painful time during Ronald Reagan's presidency is a grim marker of how bad things can get. Yet the current recession could slice deeper into the U.S. economy.
If it lasts into April - as it almost surely will - this one will go on record as the longest in the postwar era. The 1981-82 and 1973-75 recessions each lasted 16 months.
Billionaire U.S. investor added to the gloom, saying of the economy, "It's fallen off a cliff." He added, "Not only has the economy slowed down a lot, but people have really changed their habits like I haven't seen."
Buffett predicted that unemployment will likely climb a lot higher before the recession is done, but he also reiterated his optimistic long-term view: "Everything will be all right. We do have the greatest economic machine that's ever been created."
Unemployment hasn't reached 1982 levels and the gross domestic product hasn't fallen quite as far. But the hurt from this recession is spread more widely and uncertainty about the country's economic health is worse today than it was in 1982.
Back then, if someone asked if the nation was about to experience something as bad as the Great Depression, the answer was, "Quite clearly, `No,"' said Murray Weidenbaum, chairman of the Council of Economic Advisers in the Reagan White House.
"You don't have that certainty today," he said. "It's not only that the downturn is sharp and widespread, but a lot of people worry that it's going to be a long-lasting, substantial downturn."
For months, headlines have compared this recession with the one that began in July 1981 and ended in November 1982.
"I think most people think it is worse than 1982," said John Steele Gordon, a financial historian. "I don't think many people think it will be 1932 again. Let us pray. But it's probably going to be the worst postwar recession, certainly."
The 1982 downturn was driven primarily by the desire to rid the economy of inflation. To battle a decade-long bout of high inflation, then-Federal Reserve Chairman Paul Volcker, now an economic adviser to President Barack Obama, pushed interest rates up to levels not seen since the Civil War. The approach tamed inflation, but not without suffering.
Hardest hit was the industrial Midwest; the Pacific Northwest, where the logging industry lagged from construction declines; and some states in the South, where the recession hit late.
Frustrated workers fled to the Sunbelt to find work. In Michigan, which led the nation in jobless workers, newspapers offered idled auto workers free "job wanted" ads in the classified section. Mortgages carried double-digit interest rates. When the 1982 recession ended, the national jobless rate had hit 10.8 percent.
Just like today, that recession led to political finger-pointing.
© MMIX, CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.
Add a Comment See all 84 Comments
- Obama destroyed the economy and health care is next to fall and Obama has outspent bush not 1 to 1 but 8 years and two wars to 1month G_D Help uS.WE HAVE 46 more months to go with boy wonder spending all the way. AMerica you deserve it You did the same thing the palistiens didwhen they elected hamas you elected someone who can only harm you and then act surprized when your savings turns to dust...... ANd he come up on the wrong side of every plan, every issue and even the moral pulse of the country.. Wise up America he is BLEACH HE KILLS EVERTHING HE TOUCHES
America is BANKRUPT BY OBAMA till2012 46 months to go - Reply to this comment
- Thanks criminal Republicons and their fascist friends for giving Obama and us a 1.2 trillion dollar deficit. Thanks for two failed wars and ruining our manufacturing base. And giving another trillion in tax cuts to the rich and 800 billion to the bank criminals on Wall Street. Time to seize all their assets. Time to abolish the failed Republicon Party of war and death and spending.
- Reply to this comment
- "I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.
- Reply to this comment
- 2008 Preamble to Declaration of Independence
We the rich hold these truths to be undeniable; that all rich people are created above all others & that from our superiority is created by corrupted God, that we derive our rights inherent & inalienable, above anyone else, we decide what the preservation of life, & liberty, & the pursuit of happiness is; that to secure our position to these ends, our token government is instituted by the rich, deriving their just powers because they have the armies and from the consent of the rich; that whenever any person shall become destructive of our rules, it is the right of the rich to destroy, alter or to abolish any rule, law that interfere with the rule of the rich, & to institute new definitions at will and without notice , laying ours foundation on the backs of the not rich. We shall organize our powers in such a form, as to keep all non-rich at bay and shall protect our safety & happiness by force should the poor rise up due to the heavy yoke around their necks. - Reply to this comment
- The economy will improve about 90 days after the "bad assets", and the institutions that allowed them, go through the bankruptsy process. Long overdue.
Posted by payasyougo
this is just more republican 'do nothing' but give the rich tax breaks mentality. this is one big reason that americans voted overwhelmingly for barack obama and the democrats. - Reply to this comment
- The economy will improve about 90 days after the "bad assets", and the institutions that allowed them, go through the bankruptsy process. Long overdue.
Posted by payasyougo at 3:51 PM : Mar 9, 2009
When Obama gets all his agendas started, then he will go back and fix the Banking problems, they are the key to fixing this.
Emanual said "Never waste a good crisis to get done what you normaly wouldn't be able to do". - Reply to this comment
- Thank you 08 Republicans, Bush and anyone else that voted for the "bailout" last year instead of letting the markets crash, burn and rebuild - which they do when left alone. And thank you Democrats and Obama for picking up where the previous incompetents left off.
Hope, without a plan, is just plain reckless.
The economy will improve about 90 days after the "bad assets", and the institutions that allowed them, go through the bankruptsy process. Long overdue. - Reply to this comment
- Yup - President Obama has done his best - but as Conservatives have told you all along - it will only succeed in spending our children and grandchildren's money. He went for the pork, and then bluntly lied to us about how no pork existed in his stimulus bill.
So unemployment has accelerated, the DOW was accelerated in its downward motion, and Barry is completely devoid of positive notions about his own plan. Much of it doesn't take place until he's out of office, but OH, he needed that vote to go for the bill pronto.
Well Dems - looks like you are due for replacement in 2010, don't it.
Bummer for those up for re-election. - Reply to this comment
- noloyalisti :
This is curtesy of ABC News:
"An AIG report to the Treasury Department last month warned that if the government didn't come to its rescue again, its collapse would trigger a "chain reaction of enormous proportions" that would "bankrupt the entire system" and make it impossible for AIG to repay the billions it already owed the U.S. government. Four days later, AIG was given $30 billion in federal aid on top of the $130 billion it had already received."
I thought you may find it of interest. So much for change. See....? Reid, Pelosi can still be blackmailed and Obama never had a clue. - Reply to this comment
- "...There's a fundamental difference between now and 1982. That recession was induced by the Fed to combat 15 years of ever growing inflation. It 'reset' the American economy, leaving it PRIMED for a massive, sustained recovery (that Reagan took credit for). Its industrial base was, after all, STILL there, waiting for the right conditions..." ---ubrew12
HAHAHAHAHAHA!!!
Tell me another bedtime story. If you think that the Fed's eradicated inflation. They didn't. It merely took different forms. What industry learned to do after that was cheapen, cheapen, cheapen products. The 70's was about the last time you could get any kind of consumer product that has any durability and reliability. Things were still made with real metal, not plastic, back then. And a half-gallon of Ice Cream was 2 quarts, not 1.75 (and now, 1.5)
quarts. Oh sure, we have better plastics now, 20 years later, but they are still plastic and don't last as long. And prices are still much, much higher than in the 80's and they are still climbing. Been in the grocery store lately? Industry also learned how to cut costs of the distribution channel. There was a time when someone could make a family wage working as a retailer. No longer. And industry has also been cut, cut, cutting wages all over the place. So don't sit there claiming things were better in the 80's. I was fresh out of school then and looking for my first job, I know what it was like. Things didn't get better until a decade later, in the 90's, when Clinton raised taxes on the rich. - Reply to this comment
Author Thomas Friedman on Obama's Afghanistan plan and the war on terror.
