How Do Our Current Economic Troubles Compare to the 1970s?
Question: It seems that comparisons of our current economic troubles to the Great Depression are exaggerated. How would you compare today to the recession of the 1970s?
Paul Solman: Pretty close to the worst previous post-WWII recession: ’74-‘75. Different worry, of course. Then it was “stagflation”: a stagnant economy coupled with inflation, which raged throughout the decade. Now it’s what you might call “whichflation?” — INflation or DEflation? There are reasons to fear each. (See Merle Hazard’s wonderful country ballad on the topic.)
Along one dimension, however, this so-called “Great Recession” is worse than the 1970s. That dimension is unemployment. The official post-WWII high was recorded in 1982 under President Reagan: 10.8 percent. Officially, we haven’t quite hit that peak this time around.
But when you factor in the changes in how we reckon unemployment these days, compared to the past, and consider the impact of a much higher prison population and millions more Americans drawing government disability insurance, actual unemployment is surely higher now that it was in 1982, or in the ’74-‘75 recession. See our story on this subject for more detail.