Unemployment Rate and Congress from 1987 to 2012

Unemployment Rate – Past 25 Years

This chart shows the Unemployment rate for my lifetime, from July 1987 to July 2012. That’s one quarter of a century worth of data. One quick positive point, we’re almost back down to 1992 levels! I’m a glass-half-full kind of person, what can I say?

Gray – Periods of Recessions
Blue – Democratic majorities in the House and Senate
Red – Republican majorities in the House and Senate
White – Neither party has the majority in both the House and Senate

The inspiration for this analysis is [this graph] that was posted on Facebook. I thought adding some color and verifying the dates would be fun. (It was.) I didn’t have any expectations, but surprisingly, there were distinct patterns on this chart. At first, I limited the range to 20 years, from 1992 to 2012. This failed to include the Gulf War however, and I wanted a point of reference for the Afghanistan and Iraq wars.

Speaking of historical events, I have listed a rough timeline below, consisting of events I remembered and for which I went hunting down specific dates.

Timeline, for quick reference:

1981-1989: President Reagan (Republican)
1989-1993: President Bush (Republican)
1993-2001: President Clinton (Democrat)
2001-2009: President Bush (Republican)
2009-Present: President Obama (Democrat)

1990: Gulf War begins
1997: Federal budget balanced
2001: Afghanistan War begins (World Trade Center terrorist attack)
2003: Iraq War begins
2008: Troubled Asset Relief Program (TARP) and Emergency Economic Stabilization Act (Bank and Auto Bailouts)
2009: Car Allowance Rebate System (Cash for Clunkers) and American Recovery and Reinvestment Act (Economic Stimulus package)
2010: Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act (Extension of Bush-era tax cuts to avoid Clinton-era taxation levels) and Patient Protection and Affordable Care Act (Obamacare)
2011: Budget Control Act (Increase Debt ceiling by $400 billion)

You might notice a lack of events prior to 2001. Reason: I don’t remember the 1980’s at all, and in the 1990’s I was a still a kid (something tells me the lyrics to The Fresh Prince of Bel Air have nothing to do with unemployment…). If I (likely) left something of national or economic importance out, tell me in the comments and I’ll add them.

Now we have a graph, some additional data, and some key events. Given this information, what are your interpretations? What do you notice? Here are a couple of points that I see:

1.  War appears to precede recession. Economic instability of any kind seems to precede recession. That’s probably not surprising.

2.  Presidents of the past twenty-five years have each had to deal with an opposite party majority of at least one branch of Congress at some point during their respective terms. I hope that implies a good check-and-balance of partisan power between Congress and the President.

3.  The unemployment pattern seems to follow the party in control of Congress, rather than the party affiliation of the President. Considering Congress sets the federal budget, maybe that isn’t such a strange result.

4.  In the strictly Red blocks, unemployment trends downward. Does this imply that businesses hire more during Republican-controlled Congresses? If so, why?

5.  In the Blue blocks, unemployment follows a tilted ‘S’ shape, with a recession at the center. (Or, a negative sine curve, with a recession where the curve crosses the x-axis.) If you look at the Red blocks as continuous, it also has the same tilted ‘S’ pattern. I don’t have any explanation of that, except that fluctuation up and down should probably be expected.

Image

Sources and Acknowledgements:

1.  Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis: Civilian Unemployment Rate [UNRATE] ; U.S. Department of Labor: Bureau of Labor Statistics; http://research.stlouisfed.org/fred2/series/UNRATE; accessed September 30, 2012.

2.  US House of Representatives  elections, Majority party, 1986-2010, http://en.wikipedia.org/wiki/United_States_House_
of_Representatives_elections,_2010, accessed September 30, 2012.

3.  US Senate elections, Majority party, 1986-2010, http://en.wikipedia.org/wiki/United_States_Senate_elections,_2010, accessed September 30, 2012.

4.  Timeline events and dates, http://www.google.com, accessed September 30, 2012.

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