Factory jobs disappeared. Inflation soared. Unemployment climbed to alarming levels. The hungry lined up at soup kitchens.
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.
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.
For months, headlines have compared this recession with the one that began in July 1981 and ended in November 1982.
• In January, reports showed 207,000 manufacturing jobs vanished in the largest one-month drop since October 1982.
• Major automakers’ U.S. sales extended their deep slump in February, putting the industry on track for its worst sales month in more than 27 years.
• Struggling homebuilders have just completed the worst year for new home sales since 1982.
• There are 12.5 million people out of work today, topping the number of jobless in 1982.
When the government reported a 10.1 percent jobless rate for September 1982, organized labor rallied across the street from the White House. A few protesters chained themselves to an entrance at the Labor Department. The U.S. Chamber of Commerce called it a national tragedy and blamed Democrats. Democrats called it a national tragedy and blamed Reagan.
Like Reagan did then, Obama is dishing up hope. Trouble is, people can’t visualize any reward they might get from making it through this recession, said William Niskanen, an economic adviser to Reagan.
Consumer confidence is in free fall. Banks are in peril. The overall economy, as measured by the GDP, shrank at a 6.2 percent annual rate in final three months of last year, the worst drop since the first quarter of 1982. The unemployment rate, at 8.1 percent in February, hasn’t reached the 10.8 percent reported in November 1982, but the recession is not over.
It’s not only blue-collar workers who are feeling the greatest anguish. Americans who are trapped in houses worth less than their mortgages are suffering. So, too, are people whose personal wealth is tied to the stock market. Personal wealth is dwindling in the U.S., and the effects of the financial meltdown have been felt around the world.
