A Different Look at the 1970s

Once again, it's been several years since I mentioned economist and Pioneer Press columnist Ed Lotterman here. I've been meaning to post about one of his October 2022 columns, written during the time of inflation hysteria leading up to the November 2022 elections.

Now that gas prices are settling below $3.00 a gallon, his article comparing the 1970s to the 1980s (called That '70s Show' or 'Happy Days'?) seems a bit less on topic, but still worth filing away for future reference.

Those of who were around for the 1970s remember the inflation, but we're less likely to remember the even more significant wage growth:

“Real disposable per-capita GDP,” the inflation-adjusted value of output per person, rose by 3.4% a year in the 1970s, higher than any other decade from 1950 to the present. It grew as much in those 10 years as in the 20 from 2000 to 2020.

Inflation-adjusted earnings in manufacturing grew a half a percent a year in the 1970s. That doesn’t sound like much, but they fell a half a percent a year in the 1980s, as union jobs in the “rust belt” of autos and steel vanished. And the 1970s increase was four times the rate from 1990 to 2010.

Other significant aspects of life were better in the pre-Reagan era as well:

It also was easier to be a young person in the 1970s than now. College costs were low. It was easy to get a job on graduation from high school or college. Total employment grew 2.4% a year, the highest since World War II. Job growth has not hit 1.4% in any of the last three decades.

People correctly think that, despite growth in the number of people with jobs, the 1970s were years of high unemployment in addition to inflation. That is correct. The average unemployment rate was 6.2%, above the 1950s and 1960s. But the average for the 1980s, seen by many as a decade of wonderful prosperity, was a bruising 7.3 percent, the highest in the last 110 years excepting the 1930s. And the 6.2% rate for the 1970s is exactly the same as for the pre-COVID decade from 2010-2020.

I graduated from college in 1982, and I can tell you the job market was terrible: the worst until 2008/2009, and maybe even worse than those "Great Recession" years.

The federal deficit was at low ebb as the 1970s ended, as well as the debt relative to the size of the economy. Both of those began to change in the opposite direction under Reagan (the numbers are in Lotterman's column). 

What would a Paul Volcker Federal Reserve Bank combined with a second Carter Administration have been like? Now there's an alternate history for someone to write.

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Most of my past Lotterman write-ups:

A tale of two columnists (2010)

Is your grandma a welfare queen? (2010)

Double lucky duckies (2011)

My vaccine rant (2011)

Lotterman, Soucheray talk taxes (2011)

A Medicare primer from Ed Lotterman (2015)

Guns, immigrants, path dependency (2017)