WASHINGTON (Reuters) - The U.S. unemployment rate was probably around 9.5 percent, comparable to the jobless rate in 1982 if adjustments were made to factor in demographic changes and undercounting, a think tank said on Thursday.
The Center for Economic and Policy Research said the current recession would be the worst since the post-war period, beating the 1982 downturn, which lasted 16 months.
“On an apples-to-apples basis the unemployment rate today goes from about 8.1 percent to about 9.5 percent, which is just 0.2 percentage point lower than the 9.7 percent average for 1982,” said John Schmitt, a senior economist at the CEPR.
“That was the highest unemployment rate we had in the post-war period. We are almost where we were at the worst point of the worst recession of the post-war period.”
Schmitt said relative to 1982, the official jobless rate understated the true slack in the economy. He pointed to changes in the composition of the labor force and the fact that the monthly household survey used to determine the jobless rate missed a larger portion of the population.
“The typical worker in the economy today is 42 years old and the typical worker in 1982 was only 35. That has a very significant effect on the unemployment rate because younger people have a higher unemployment rate than older workers,” he said.
The current unemployment environment was affecting older workers more than in the past, said Schmitt.
“I don’t think there is any economist who thinks things aren’t going to get worse before they get better,” he said. “Our fears that this will be the worst recession of the post-war period are almost certainly not only going to come true, but they are in the process of becoming true right now.”
Reporting by Lucia Mutikani; Editing by Dan Grebler
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