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Art Laffer covered this in one of his recent columns:
Quote:
In 1981, Ronald Reagan—with bipartisan support—began the first phase in a series of tax cuts passed under the Economic Recovery Tax Act (ERTA), whereby the bulk of the tax cuts didn't take effect until Jan. 1, 1983. Reagan's delayed tax cuts were the mirror image of President Barack Obama's delayed tax rate increases. For 1981 and 1982 people deferred so much economic activity that real GDP was basically flat (i.e., no growth), and the unemployment rate rose to well over 10%.
After Jan. 1st, 1983, the economy started a boom which lasted for years, despite Congress' incremental raising of income taxes.
I was trying to draw a comparison between the current unemployment crisis we are experiencing and 1983, and it is just not the same, I found this clip of NBC News Overnight from 1983, and between December/82 and November/83, the unemployment rate fell 2.4%! According to this clip, 750000 Americans found jobs in November 83, sorry, but I dont even see how that would be possible today, I feel nostalgic when I watch this clip, it seems like this country just aint what it used to be
In the month of September 1983 there were more than 1.1 million jobs added to the economy. 3.4 million jobs were created in 1983 alone. 1984 saw another 3.9 million jobs created. The unemployment rate dropped by 3.5% between December of 1982 and December of 1984 (biggest 2 year drop in history). Growth for 1983 was 7.2%, a level not seen since the 50s, and a figure that has not been matched in the 27 years since. In fact, no year since then has even broken 5%.
We broke out of the early 80s recession with a year and a half of growth above 7%, even reaching as high as 9%. During the current recession growth has been 2.2%, 5.6%, and 3.0%. Job growth has lagged initial GDP growth by 9 months. In the 80s, job growth returned immediately with GDP growth.
In the month of September 1983 there were more than 1.1 million jobs added to the economy. 3.4 million jobs were created in 1983 alone. 1984 saw another 3.9 million jobs created. The unemployment rate dropped by 3.5% between December of 1982 and December of 1984 (biggest 2 year drop in history). Growth for 1983 was 7.2%, a level not seen since the 50s, and a figure that has not been matched in the 27 years since. In fact, no year since then has even broken 5%.
We broke out of the early 80s recession with a year and a half of growth above 7%, even reaching as high as 9%. During the current recession growth has been 2.2%, 5.6%, and 3.0%. Job growth has lagged initial GDP growth by 9 months. In the 80s, job growth returned immediately with GDP growth.
Do you know if that GDP growth in the 80's was government induced ?
Our current GDP growth was all based on government spending or subsidized consumer spending via all those "cash for xxxx" programs right near GDP measuring time.
If you have a bogus GDP number then do you really have growth ?
I was trying to draw a comparison between the current unemployment crisis we are experiencing and 1983, and it is just not the same, I found this clip of NBC News Overnight from 1983, and between December/82 and November/83, the unemployment rate fell 2.4%! According to this clip, 750000 Americans found jobs in November 83, sorry, but I dont even see how that would be possible today, I feel nostalgic when I watch this clip, it seems like this country just aint what it used to be
Unemployment will remain high until the current administration is out. That is my prediction. Businesses are very hesitant about hiring right now because, by and large, they are nervous about all the changes taking place in our country.
I think a lot of them are in "safety mode" right now. It will take solid conservative leadership to get most businesses hiring confidently again.
Do you know if that GDP growth in the 80's was government induced ?
Our current GDP growth was all based on government spending or subsidized consumer spending via all those "cash for xxxx" programs right near GDP measuring time.
If you have a bogus GDP number then do you really have growth ?
Well, most of the 80s GDP recovery followed the normalization of interest rates. During 1981 and 1982 interest rates had been through the roof, severely limiting housing and auto loans. By 1983 those rates had come down to reasonable levels, and an enormous across-the-board surge in the economy occurred, which brought us out of recession. Some of the biggest gains were seen in investment in "residential structures" as the BEA calls it (I call them houses). Consumer spending on both durable and non-durable goods also skyrocketed.
"Cash for Clunkers" artificially added around 2.3% to GDP in the 3Q of 2009. Good for putting on a show, but in terms of actually helping the economic recovery it did nothing. In fact, even with the $1.2+ trillion pumped into the economy, GDP growth has been dismal thus far, with the exception of the last quarter of 2009, although most of that growth was from changes in private inventories..
Today's situation sounds more like 1933, the era of the Great Depression, than 1983. If the government were really honest with their unemployment numbers, the REAL rate is closer to unemployment rate of ~25% which characterized the Great Depression as well....
Of course the biggest difference between now and then is during the Great Depression the government paid people to work, but today the government pays people to not work.
Today's situation sounds more like 1933, the era of the Great Depression, than 1983. If the government were really honest with their unemployment numbers, the REAL rate is closer to unemployment rate of ~25% which characterized the Great Depression as well....
But like wehotex pointed out - there were manufacturing jobs to come back to, that would bring back the economy. All that's gone now. Not much is made in the USA, nor will there be anytime soon.
But like wehotex pointed out - there were manufacturing jobs to come back to, that would bring back the economy. All that's gone now. Not much is made in the USA, nor will there be anytime soon.
Exactly, if you watch the video, it states that most of the new jobs created in 1983 were in manufacturing. Today, there is no such thing anymore. I don't even see how we are going to get out of this recession or depression. There are people that have been unemployed for two years!
Try comparing to the Great Depression rather than a recession. This is different. We've passed recession. I'm waiting on some brave soul in the government to say depression.
It took them a year to admit recession yet many here said it and were blasted for it until the government confirmed what we already knew.
Unemployment was 25% during the great depression, HT. The current figure is, 9.7%, there is no comparison.
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