Saturday, November 08, 2008

WOWO

Charlie bucher on WOWO this morning was comparing the economy during President Carter’s transition to President Reagan’s to our present economy of President Bush’s to President Elect Obama’s transition. He gave a few facts, but they were one dimensional without insight or background.

Unemployment during during Carter’s last years was reported as over 7% while he was saying today is 6.5%. Is there a difference between comparing just the unemployment rates of two time frames, yes? During Carter’s last years, unemployment benefits were extended from 26 weeks to 52 weeks. This is not the case today. The current unemployment rate does not include the 20 million workers who have exhausted unemployment benefits and have not found work.

Inflation was another factor that Bucher identified as being higher under Carter. I cannot recall the exact values he used, but the CPI index and SSA Average Wage for each year are identified below.

Year

CPI (January)

Inflation

SSA Average Wage

Wage Growth

1977

58.500

6.3%

$ 9,779.44

6.0%

1978

62.500

5.0%

$ 10,556.03

7.9%

1979

68.300

6.4%

$ 11,479.46

8.7%

1980

77.800

8.5%

$ 12,513.46

9.0%

1981

87.000

12.2%

$ 13,773.10

10.1%

1982

94.300

10.6%

$ 14,531.34

5.5%

1983

97.800

7.7%

$ 15,239.24

4.9%

1984

101.900

3.6%

$ 16,135.07

5.9%

1985

105.500

4.0%

$ 16,822.51

4.3%

1986

109.600

3.4%

$ 17,321.82

3.0%

1987

111.200

3.7%

$ 18,426.51

6.4%

1988

115.700

1.4%

$ 19,334.04

4.9%

In addition manufacturing was a much larger part of the economy then than now. This means we had a better trade balance. Oil imports were less than 50% and now are greater than 70%.

I have also heard Obama state he favors extending unemployment benefits to 52 weeks. This will certainly increase the number of unemployment claims that dictate the unemployment rate. I hate to be a pessimist, but I think we are facing a more difficult economic period than the transition between Carter and Reagan.

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