Sluggish but durable: 5 things about U.S. expansion
The U.S. economy acquired an exclusive label Friday: Recessionfree for eight full years. Yet the third-longest economic winning streak in American history still doesn’t get much love.
No wonder: Despite its longevity, this expansion has delivered subpar gains in its pace of growth, full-time hiring and pay increases since it emerged from the wreckage of the Great Recession in June 2009. It’s the weakest economic recovery since World War II.
And the gap between the richest among us and everyone else has widened.
Still, the economy is hardly the disaster that President Donald Trump insists he inherited. Employers have been hiring steadily, month after month, since 2010. A majority of Americans now enjoy unusual job security.
The government estimated Friday that the economy grew at a 2.6 percent annual rate from April through June. It wasn’t sizzling. But just the fact that the economy has sustained its growth since mid-2009 represents a major statistical milestone.
Here are five things to know about the expansion as it trudges into Year 9:
It’s got staying power
The National Bureau of Economic Research has been measuring U.S. recessions and expansions since the 1850s. Over that time — from President Franklin Pierce’s administration to Trump’s — only two expansions have matched the lifespan of the one that officially began in June 2009 and has endured for 96 months:
A 106-month expansion that ran from February 1961 to December 1969, when President Lyndon Johnson stoked growth with spending on domestic programs and the Vietnam war.
And a 120-month streak that began in March 1991 and ended in March 2001, after the dotcom bubble burst.
What’s more, the job market has enjoyed a remarkable run: Employers have added jobs for 81 straight months — easily the longest streak on record. And the number of Americans applying for first-time unemployment benefits has stayed below 300,000 for 125 straight weeks. That’s the longest such streak since 1970, when the population and workforce were much smaller.
It’s no boom
Compared with the other two long-lasting expansions, the current one looks, well, weak. America’s gross domestic product has grown less than 19 percent over the past eight years — much less than the 51 percent growth posted in the first eight years of the 1961-1969 expansion and the 34 percent in the same span of the 19912001 expansion.
Job growth has been consistent but hardly robust. A big reason is just how bleak the job picture was eight years ago. The Great Recession wiped out 7.4 million jobs. And the job market didn’t actually hit bottom until February 2010 — eight months after the recession ended.
Over the past eight years, the number of U.S. jobs has risen just 12 percent to 146 million. Over the same span, job gains had surged 30 percent in the 1961-1969 expansion and 18 percent in the 1991-2001 expansion.
The current recovery was stunted at the outset by lingering wreckage from the financial crisis. Consumers stopped borrowing after having charged too much on their credit cards and having watched their home values sink. Banks, struggling with bad loans, tightened credit.
Since then, the expansion has been hobbled by a slowgrowing labor force and by a puzzling slump in worker productivity, which is the amount of output produced, per hour worked.
Job growth exceeded 200,000 a month in 2014 and 2015 but has been trending lower — 180,000 a month so far this year — in part because there are fewer people who want or need a job.
“The labor market is pretty healthy,” says Robin Anderson, senior economist at Principal Global Investors. “But over the last couple of years, we have definitely moved to a slower pace of job growth.”
Government hasn’t helped much
Government spending and investment usually play a vital role in restoring economic health after recessions. Faced with the deepest downturn since the 1930s when he took office in January 2009, President Barack Obama pushed through Congress an $862 billion stimulus package. Many economists credit the blend of tax cuts and spending increases, in no small part, for reviving the economy.
But once Republicans won the House of Representatives in 2010 and the Senate in 2014, they proved reluctant to commit to more spending at a time when budget deficits were soaring. Likewise, state and local governments cut back.
The result was that government spending and investment at all levels — federal, state and local — dropped 6 percent in the first eight years of this expansion. By contrast, government spending had risen 43 percent in the first eight years of the 1961-1969 expansion and 7 percent over the same span of the 19912001 expansion.
Government payrolls have dropped 1 percent since June 2009. They had risen 42.4 percent in the first eight years of the 1961-1969 expansion and 9.1 percent this deep into the 1991-2001 expansion.
Meager pay gains
Americans are still waiting for shrinking unemployment — the 4.4 percent jobless rate is near a 16-year low — to translate into healthier wages.
Comparisons are difficult because the government didn’t track hourly pay for all private-sector workers until 2006. But according to government data gathered by the Economic Policy Institute dating to 1947, pay for rank-and-file workers, adjusted for inflation, rose just 3.5 percent from 2009 to 2016. That was a sharp slowdown from the 6 percent increase from 1991 to 1998 and 13.5 percent from 1961 to 1968.
Little progress for those who’ve suffered most
As the economy rebounded from the Great Recession, the very richest benefited most. Emmanuel Saez, an economist at the University of California, Berkeley, found that 52 percent of income gains from 2009 to 2015 went to the richest 1 percent of Americans. (In the first three years of the expansion, the discrepancy was far starker: The top 1 percent received 91 percent of income gains.)
Unemployment has plunged — from a peak of 10 percent in October 2009 to 4.4. But the long-term unemployed— those out of work for six months or more — make up an unusually large share of today’s jobless: 24 percent, versus 4 percent eight years deep into the 1961-1969 expansion and 12 percent in 1991-2001.