According to the book I had just finished (This Time is Different), In an analysis of post-1900 banking crises which have occurred (of which there are 14), the authors found that on average the unemployment rises (as measured from trough to peak) by 7 percent and takes an average of 4.8 years to do so. Now that more time has passed and we at least appear to be in the midst of a recovery (albeit a long and brutal one) I thought it might be interesting to take another look.
Here's an updated graph of unemployment, going back to 2002 (again, taken directly from the Bureau of Labor Statistics):
What does this tell us? As before, the unemployment number technically started its inexorable climb in June 2007 (when it increased from 4.4 to 4.6 and never again dipped below 4.5). We peaked in October 2009 at 10.1%. This was all known when I wrote about this before, but at the time there was still the risk of a double-dip recession and a higher peak. I think that we can now take that off of the table (by which I mean, should another recession hit it will almost certainly be due to a new economic calamity and not this same one revisited upon us).
Now, let's look at how Prognosticator John did. This is what I wrote back in October 2010:
"we'll finally get unemployment down below 9% by mid-2011, hopefully below 8% by end of 2011, and below 7% by mid-2012 right when the election starts really ramping up. And I really think that 7% is the key number. If it gets below that, I think Obama is reelected easily. If it doesn't, he's got big problems."
How does that analysis stack up to reality? Well let's just say that it's a good thing I didn't place any bets on those predictions. We got below 9% unemployment in October 2011, so that wasn't too far off, but we did not manage to finally get below 8% until last month, so I was a good 9 months off there. However, as to my other prediction (that Obama would have big problems with unemployment above 7%) that appears to be fairly accurate. He is definitely still the favorite to win (Nate Silver over at FiveThirtyEight.com has perhaps the best forecasts to be found anywhere) but those odds looked a whole lot rosier one week ago.
Speaking of which, I did watch the debates last week and pretty much everything about it was brutal. It was a thoroughly boring affair with neither side providing any real specifics as to what they want to do and mostly just regurgitating the same talking points that are showing up in my inbox 5 times per day (and since I gave money to McCain in the 2008 primary season I get the e-mails from both sides). As bad as Obama was (and he was pretty bad) I am still fairly confident about his chances because of how the story has been framed. The big story of the night wasn't "Romney blows away everyone with stellar performance" it was "Romney holds his own, and Obama was terrible." I would be a lot more concerned if ti had been the former rather than the latter because, simply put, you always have the ability to make yourself better, but you are much more limited in your ability to make your opponent look worse.
On a personal note, I believe I recognized what was happening to Obama during that debate, because I have been there myself. Certainly I have never experienced anything close to that level of stakes and pressure, and I am also certainly not even a fraction of the communicator that he is. But throughout my career (and even in school to a degree) I have succeeded to a large extent because of my ability to speak extemporaneously and communicate my point in an intelligent, succinct, and thoughtful manner with minimal preparation (keep in mind I'm talking about in school and at work, not after a 12-pack or when arguing sports). When you have that ability, eventually you get to the point where you just expect it to be there and you don't even think about it anymore. And then one day (almost always at the worst possible time, I think it's a rule) you just reach down and . . . nothing. It's just not there for you and you sound like . . . well, like Obama sounded last Wednesday.
It will be very interesting now to see how he responds in the next debate, because it actually gets back to the panic vs. choke discussion I wrote about with the replacement refs. Obama has a natural gift as a communicator, but now he must feel abandoned by his gift and there is the real danger that he will overthink and make things worse, like a .300 hitter mired in an 0 for 12 slump who thinks about every pitch instead of just reacting. But then again, you don't become leader of the free world without some kind of staunch belief in your own awesomeness, so if he can just shrug it off as just one bad night, a certain amount of delusion may serve him well.
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