Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
The news people are saying that the economy is currently worse than at any time since the great depression of the 1930s. This is hard to believe.
I graduated from college in 1981, which was the start of the Reagan Recession. Unemployment in my hometown was three times what it is today. Some cities were basically closed down due to unemployment rates that were close to 25%. A single job was advertised and hundreds would apply. Social services were overwhelmed. Over a thousand banks closed.
Historians: How does the current economy compare in your opinion to the recession of the early 1980s?
Really read what it says, the unemployment rate peaked for a few months only and part of that had to do wiith, what was referred to as RIf: reduction in force, which affected the federal govenment, not private industry per say. Yes, of course there were some cities hit hard, as there always are during bad economic times. But it wasn't coutry wide like you would want people to believe. Our daughter graduated from college in 1980 as did her husband. Neither of them had any trouble getting jobs...nor did any of thier friends.
As for bank closures, do you have any idea why they were closed? It wasn't directly due to any recession, it had more to do with them misusing funds and much of this happened later in the 80s.
you can believe what you want, but no, the recession in the early 80s was nothing like what we have experienced recently. The one thing that was a concern, high interest rates. Of course that was on long term loans, not on credit cards like we are experiencing today.
Economics is more in depth and not as simple as some would like to make it out to be. No one can blame Reagan for the problems. If it had continued for years and years, yes, but it did not and it goes back many years prior to his election. Recessions take years to develop.
You do not have to ask historians how the two compare, we already know, and the answer isn't what you want to hear or what you think.
In my city, unemployment was 16%, worse than Flint Michigan. Interest rates were 20% and my father was an architect and my mother a realtor. They told me flat-out that I would have to work my way through school to get a degree. So, somehow, I finagled a job at a newspaper. I went to school from 8-2:30, worked from 3 to midnight, and studied whenever I could. I didn't get much sleep for about three years.
I was a realtor at that time as well: it was HELL for us, but not because of high unemployment, because of the interest rates..The market was very flat or worse awful from about 1979 til 1983 or so.
The early 80s recession had it's roots in the 1973 arab oil embargo and Nixon severing the last ties of the dollar with gold. The spikes in fuel set off a major decline in the auto industry, at the same time the steel industy moved overseas. Inflation was climbing under Nixon and Ford, but the worst part of the recession was from 1978 to 1982.
I wouldn't call it the "Reagan Recession" as he was the 4th president to deal with it, and the only one of the previous three to turn it around. I would not pin it all on Carter either, as the period from '73 to '82 was rife with enonomic peril for the US. There was probably no way to avoid it. Just like the great depression in the 1930's, FDR's new deal could not turn it around either.
It's interesting to look at equity tables from that period as well. Almost 10 years of "sideways." One of the reasons that the two prosperous decades 1984-2006 looked so good/ produced so much return/ was because the decades surrounding them (1973-1983 and 2007-2012+) were negative in terms of real return.
This is why statistics are beginning to emerge comparing median wealth or real-dollar value of assets with circa 1970. For example, houses are worth today what they were worth in 1969 (already true in several states).
The only people who are better off now rather than then, are those who saved (assiduously) or had a lucky investment break.
It's interesting to look at equity tables from that period as well. Almost 10 years of "sideways." One of the reasons that the two prosperous decades 1984-2006 looked so good/ produced so much return/ was because the decades surrounding them (1973-1983 and 2007-2012+) were negative in terms of real return.
This is why statistics are beginning to emerge comparing median wealth or real-dollar value of assets with circa 1970. For example, houses are worth today what they were worth in 1969 (already true in several states).
The only people who are better off now rather than then, are those who saved (assiduously) or had a lucky investment break.
Yes, because a house is never an investment, no matter what the real estate hacks might say. The Case Shiller index shows that house prices, decade after decade have pretty much kept pace with inflation from the end of World War II. The only time when the relationship between home prices and inflation rates were seriously out of whack began in 1997 and ended in 2007. We all know what happened then.
I was in the service in 1980 and remember the start of Carter recession. Carter was a total disaster and caused massive unemployment, inflation.
YearUnemplyment rate
1975 8.5
1976 7.7 (Ford's last full year)
1977 7.1 (Carter's term begins)
1978 6.1
1979 5.8
1980 7.1 (Carter's last full year)
1981 7.6 (Reagan's term begins)
1982 9.7
Now, that spike beginning late in Carter's term and continuing into Reagan's term was because of the Volcker constriction of the money supply. This, while painful in the short term, brought a halt to high inflation. It was necessary, it was intentional, and it was supported by both Carter (under which the policy began) and his successor, Reagan (under which the policy continued and was concluded).
Aside from all that, an eventual peak of inflation at 2.0% above the rate he inherited was hardly 'massive'.
Yes, because a house is never an investment, no matter what the real estate hacks might say. The Case Shiller index shows that house prices, decade after decade have pretty much kept pace with inflation from the end of World War II. The only time when the relationship between home prices and inflation rates were seriously out of whack began in 1997 and ended in 2007. We all know what happened then.
When you figure in property taxes, home maintenance and repair a house has a negative return on investment.
The early 80's recession hit my interests hard. I had to peddle an old Big-Wheel around with worn plastic wheels all summer and Mom said I couldn't have and AT-AT playset because it was too expensive. I did get a Castle Greyskull though.
But honestly, it's worse today, though the true severity of the situation is being masked by monetary policy. Back then things were tight but interest rates were in the double-digits. If the FED tried that now, we would probably experience the apocalypse.
When you figure in property taxes, home maintenance and repair a house has a negative return on investment.
bull: figure in normal times, not now real estate values go up at least 6% a year, but remember that is on the entire purchase price. Say a home cost 100,000, you put 10% down, with a mortgage of $90,000. 6% of 100,000 last time I checked was $,6,000.You are making $6,000 on a $10,000 investment. Yes you have a house payment, but normally it is less than rent or no more than, plus with the exception of taxes your payment will never increase. Rents can always increase. BTW, not only did you make $6,000 on a $10,000 in vestment, your property is now worth 106,000 and will increase 6?% on that amout the following year. Over a 30 year period, if you keep your home that long and in normal times, there is nothing that pays a better return on your investement. Of course it takes good thinking, the right situation and some luck..We have friends who lived in Aracadia Ca for many years. They purchased their little 3 bedroom, on bath home in the mid 70s for $23,000. They sold it about 10 years ago for $650,000. You are going to tell me, it wasn't a good investment. Yes, they did some updating and added on a small enclosed patio but it still had the old, dinky, outdated kitchen and 1 bath. We paid $108,000 for our home in No Va in 1983. We sold it in 1986 for 155,000 and it took us 2 hours to sell it. All we had done was re-carpet, put in new flooing in one bathroom and the kitchen and a little paint. We paid $93,000 for our zeno lot line home in Lewisville, Tx in 1990 and sold it in 2001 for $131,000. We had only painted, put in a new dishwasher and had changed the kitchen sllightly. WE did have to get a new roof but that was covered by insurance as it was damaged by hail. Oh, ane we put in a new air conditioner for about $1500.
Homes do not have negative returns in normal times. How do you think most of the self made millionaires got their money? Not by renting a home, that is for sure....
Must have been a region specific thing, because FL was booming in the 80's. 83 at 15 years old me and my neighbor friend decided we would lie about our age and get restaraunt jobs. 2nd place we went to, hired on the spot. Nowadays there is college degrees going after those same busboy jobs just to stall apt. eviction for another month.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
