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BUSINESS Tuesday 9 OcTOber 2018
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Not since 1969: US regains ultra-low 3.7 pct. Unemployment

By CHRISTOPHER RUGABER rate remain in a still-low
Associated Press range between 2 percent
WASHINGTON (AP) — The and 2.25 percent.
last time the U.S. unemploy- Still, there are parallels be-
ment rate was roughly as tween the two eras. The
low as the 3.7 percent it economy had already
is now — December 1969 grown, if modestly, for more
— the economy was over- than seven years when
heating, inflation was spik- President Donald Trump
ing and a short recession added stimulus in the form
soon followed. of corporate and individu-
Could that happen again? al tax cuts. Congress later
Probably not anytime soon, passed legislation that in-
most economists say. Yet creased spending on de-
there are some surprising fense and social programs.
similarities between today's And while inflation remains
economy and the late low, Trump has imposed
1960s, when the unemploy- tariffs on steel and alumi-
ment rate remained mostly num and about half the
below 4 percent for four goods the United States im-
straight years. ports from China. It has also
The jobless rate, the gov- threatened duties on im-
ernment reported Friday, ported cars. Tariffs tend to
is now at its lowest level elevate inflation by raising
since the 3.5 percent it costs, which could lead the
reached 49 years ago. Fed to step up the pace of
And the strength looks likely its rate increases.
to endure. There are a re- "That's a risk that some
cord number of open jobs, economists have worried
consumers are confident In this May 29, 1969 photo, people walk along Rockefeller Plaza area during the lunch hour in about," Andrew Chamber-
and economic growth has New York. lain, chief economist at the
been brisk. America's eco- Associated Press jobs website Glassdoor,
nomic expansion is now the said. "We could have a
second-longest on record, ton, a tax advisory firm. splurging on appliances, jumped to 6.1 percent. The hangover effect."q
having already surpassed In the late 1960s, more than televisions and cars, infla- rate wouldn't fall below 4
the boom of the 1960s. 95 percent of men in their tion started to accelerate. percent again for nearly
Despite the similar jobless prime working years either Prices jumped 4.7 percent 30 years, until September
rates, the economy then had a job or were look- in 1968. One in three work- 2000.
was very different and ing for one; today's corre- ers belonged to a union, By many measures, the U.S.
by some measures stron- sponding figure is roughly and many union contracts economy is now in a far
ger. Nearly a third of U.S. 89 percent. required annual cost of liv- different place. The Fed's
jobs were in manufactur- Still, a sharp influx of wom- ing increases. So did many biggest chronic problem
ing, which provided solidly en into the workforce in the non-union contracts. hasn't been overly high in-
middle-class pay and ben- 1980s has offset the decline All that ignited what econ- flation. Until very recently,
efits. Prosperity was more in men in the job market. omists call a "wage-price the problem has been
broadly shared, with less Overall, a greater propor- spiral": Paychecks grew to overly low inflation. The
economic inequality. tion of Americans are now keep pace with inflation. Fed's preferred inflation
It's a period that is frequent- working or looking for work Inflation, in turn, rose as gauge remained below
ly recalled with nostalgia, than back then. companies raised prices to its 2 percent target for six
although racial and eth- Back in December 1969, a afford to pay those higher years until finally touching it
nic barriers, educational mild recession was begin- wages. Inflation hit 6.2 per- in May this year.
disparities and institutional ning. The long stretch of low cent in 1969. The stage had In part, that's because con-
sexism prevented many unemployment had led to been set for more than a sumer spending is com-
millions of Americans from a classic case of an over- decade of soaring prices, paratively weak. And, as a
participating in it. heating economy. Growth escalated by gasoline- consequence, economic
"Prosperity has become the was a robust 5.8 percent in price spikes in the 1970s. growth hasn't topped 3
normal state of the Ameri- 1964. Yet President Lyndon Responding to runaway in- percent for a full calendar
can economy," a White Johnson added more stim- flation, the Federal Reserve year since 2005 — nev-
House report in 1969 said. ulus by ramping up govern- jacked up the short-term er mind the 6 percent it
Incomes, even after ac- ment spending to pay for interest rate it controls to achieved in the mid-1960s.
counting for taxes and in- his expansive "Great Soci- nearly 9.25 percent in the Inflation has also been con-
flation, jumped 7 percent ety" anti-poverty programs fall of 1969. Congress also strained by price competi-
in 1964, the best showing of and for the Vietnam War. raised taxes in a belated tion among online retailers,
that decade. The biggest Steel mills and other fac- effort to pay for the war low-priced imported goods
annual gain in the current tories cranked out more and social spending. That and relatively weak pay
decade, so far, was just 4.2 goods to support the war double-whammy tipped raises for many Americans.
percent in 2015. effort. Annual growth the economy into a reces- After the 2008 financial cri-
"A family could afford to topped 6 percent in 1965 sion, with annual growth sis, the Fed kept its bench-
live on one income and and 1966. The unemploy- plummeting to just 0.2 per- mark rate at a record low
own a house and a car," ment rate fell below 4 per- cent in 1970. near zero for seven years.
said Diane Swonk, chief cent in February 1966. In December that year, Even after a succession of
economist at Grant Thorn- With more Americans the unemployment rate rate hikes, the Fed's key