Labor statistics show highest unemployment rates in late 1982 and early 1983 what are the reasons?

I was reviewing labor stastics this morning and noticed unemployment hitting a high in this period. I was 12 years old and don%26#039;t remember anything significant about this time. Can someone pleasepoint me to information to explain these statstics?

Labor statistics show highest unemployment rates in late 1982 and early 1983 what are the reasons?auto financing

To clarify - unemployment was obviously higher during the Great Depression, but they did spike in this period.

The reason behind this spike is the short-run Phillips Curve. In the short-term, you can cause lower unemployment by expanding the money supply (creating inflation). The government did this throughout the 1970s until inflation was out of hand.

Volcker, the Fed chairman, decided to tighten monetary policy in 1982 in order to curb inflation. This caused a severe spike in unemployment (because in the short term, the Phillips curve works both ways).

Once inflation was stopped, however, employment rebounded.

Labor statistics show highest unemployment rates in late 1982 and early 1983 what are the reasons?

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If you are talking about Australia...there was a recession at that time.|||There was a world wide recession in the early 1980%26#039;s that affected most western economies, including UK; Germany; Canada; USA; Australia and New Zealand.

The effects of the recession were heightened (although not caused) by a general swing in world-wide politics towards Right Wing political parties. (President Reagan in USA, Mrs Thatcher in UK, Helmut Kohl in Germany). Even in countries that elected Labor governments there was a new mood of pro-market realism that replaced former socialist economic dogma (ie, Bob Hawke and Paul Keating in Australia and David Lange in New Zealand.)

The new politics was to encourage businesses to stand on their own two feet without the need for taxpayer subsidy. This also co-incided with the start of the new %26quot;financial services%26quot; age - where higher tec companies started expanding at the expense of the traditional industries such as mining, manufacturing and production.

The overall impact was an substantial increase in world-wide unemployment as the old industries and practices died off and the newer industries took over.

The affects where short term, however. Although some economists disagree, the reforms introduced by Regan / Thatcher (Reagonomics / Thatcherism) are now recognised as the turning point in world economics. Very few people would now wish to return to the 1970%26#039;s era of heavy industry and subsidies.|||Recession. This period followed the era of high inflation in the 70%26#039;s. Thus, politicians around the world were put under immense electoral pressure to %26quot;do something%26#039;%26#039; about inflation. According to Rudicker Dornbusch%26#039;s incite; %26#039;%26#039;if economists can%26#039;t find problems with inflation, politicians certainly can!!%26quot; Consequently, they embraced contractionary monetary policies which caused a very deep recession.