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Not Exactly Below Eight Percent
This content is provided by Americans for Tax Reform Foundation.
When the massive ARRA (American Recovery and Reinvestment Act) stimulus bill was being debated, President Obama’s economic advisors Christina Romer and Jared Bernstein infamously authored a report in which they predicted that passing the stimulus would keep the unemployment rate below eight percent. The events of the past three and a half years have proven that estimate to have been far from correct. What Romer and Bernstein were forecasting was something akin to another Reagan recovery, a phenomenon that is unlikely to occur as long as the current administration continues to meddle in the economy.
The recession of the early 1980s was one of the worst in the history of the United States, and American workers suffered the brunt of its effects. The unemployment rate reached 10.8 percent in December 1982, the highest mark since the Great Depression. However, the swift recovery from this contraction of the economy provided relief to workers. Under President Reagan, unemployment declined to 7.2 percent in June 1984 and continued falling.
Contrary to the Obama administration’s claims, “Recovery Summer” never took place. During the summer of 2010, when infrastructure spending was supposed to lead to a decline in joblessness, unemployment never dropped below the astronomically high figure of 9.4 percent. Hopes for a quick turnaround were dashed by the reality of business uncertainty. The unemployment rate has been above 8 percent since February 2009 – 40 consecutive months. For virtually the entirety of Obama’s presidency, unemployment has been above a level that it did not reach even once between the beginning of 1984 and President Obama’s inauguration. In contrast to the sharp downward trend in unemployment that occurred during the Reagan recovery, the figures from the Obama administration show a leveling off of unemployment at a level that is exceedingly high from a historical perspective. Unfortunately, the data do not appear to be getting any better. May saw an increase in the unemployment rate to 8.2 percent.
While almost all Americans are suffering during the floundering recovery, few groups are impacted more by the failure of the economy to rebound than young Americans. Workers new to the job market were a key part of the Reagan recovery. Under President Reagan, the unemployment rate for workers between the ages of 16 and 19 dropped from 24.1 percent to 17.5 percent and continued to remain low.
The Obama recovery, however, has been a different story entirely. One might expect the unemployment rate among young workers to be significantly lower under President Obama than it was under President Reagan, seeing as many more teenage Americans are now attending college full-time and therefore not part of the workforce. However, the opposite effect has occurred. Youth unemployment reached 27 percent in 2009 and 2010 – the highest figure since the BLS began recording the statistic in 1948. The youth unemployment rate has failed to decline meaningfully; in May the figure was 24.6 percent, which is higher than it ever was during the Reagan presidency.
As the data make clear, there is a massive gap between the unemployment rates under President Reagan and those that have been recorded during the administration of President Obama. When the Obama recovery is contrasted with the recovery overseen by President Reagan, it is hard to avoid judging it a failure.