Ten straight years of growth. Unemployment at a five-decade low. Higher wages for the poorest workers.
The economic expansion that just became America’s longest on record didn’t produce an especially fast pace of growth. It didn’t narrow the vast gap between the wealthiest Americans and everyone else.
But the expansion has lasted so long and it followed such a disastrous recession that it would be easy to overlook how much healthier the economy has become.
Here are some key facts about the economic recovery that began a decade ago:
JOBS, JOBS, JOBS
For all the widespread fear that robotics and automation are displacing millions of American workers, the expansion has created a bumper crop of jobs: 21.4 million, added over a record streak of 104 months of hiring. And most of those positions have been traditional full-time jobs.
Fewer people now work part time than when the Great Recession officially ended in June 2009, though the proportion of part-time workers remains above its pre-recession levels. And several studies suggest that so-called gig work — Uber, TaskRabbit, Grubhub and the like— hasn’t grown nearly as much as many experts feared.
Old-fashioned employment remains largely the rule.
IT TOOK A LONG TIME TO HEAL
Of course, all that job growth followed one of the darkest periods of layoffs since the 1930s. Nearly 9 million people lost jobs in the Great Recession. And hiring didn’t “snap back” as fast as it had during most previous recoveries. The unemployment rate stayed above 8% for 43 months, a record.
By contrast, in the 1980s, after a severe recession, unemployment remained above 8% for a far shorter period — 27 months.
In the end, though, the current expansion shrank the unemployment rate from a peak of 10% to the current 3.6%, its lowest point since 1969.
A ROBUST LABOR MARKET
With unemployment so high for so long, many Americans stopped looking for work after the recession. Some returned to school. Some stayed home to care for sick or needy relatives.
The exodus of these people from the labor force sharply reduced the proportion of Americans with jobs. Many economists speculated that the trend might prove permanent.
As the economy recovered and businesses needed to fill jobs, employers complained that a “skills gap” was at fault. That is, too many potential hires lacked the necessary skills or qualifications, many of them technology-related.
Yet as economic growth endured and hiring remained robust, millions of people were eventually drawn off the sidelines and resumed their job hunts. And skills gap or not, most of them were hired.
It took a while, but the proportion of Americans ages 25 through 54 who have jobs returned to its pre-recession peak in October 2018.
SUSTAINED BUT SLUGGISH GROWTH
The economic expansion has proved resilient but relatively anemic compared with its predecessors. Consider: The economy has expanded at an average of just 2.3% a year since the recession ended in June 2009.
Compare that with the 3.6% annual growth rate during the 1990s expansion and a 4.2% rate in the 1980s.
SLOWER WORKFORCE GROWTH TAKES A TOLL
Why has growth been so slow?
An economy grows when more people are working and when those workers become more productive. Yet retirements have accelerated during the recovery: 10,000 people turn 65 every day. Young adults are also staying in school longer and are less likely to work.
As a result, the growth of the workforce has slowed: It has risen just 0.5% a year, on average, for the past decade — barely one-third the pace of its growth in the 1980s and 1990s recoveries.
WE’RE ALL LESS EFFICIENT NOW
Not only did the growth of the labor force slow during the expansion. So did productivity, which is a gauge of the workforce’s efficiency. Productivity measures the economy’s output per hour worked.
Before the recession, the workforce’s productivity expanded, on average, 2.7% annually. Since then, it has risen at only about half that pace. Brisk productivity growth is a key ingredient in healthy economic and wage growth.
What’s caused America’s productivity slump? No one is certain. Some economists blame a slowdown in economy-wide innovation. Others, though, are more optimistic. They suggest that technologies like artificial intelligence and self-driving cars will soon accelerate productivity growth and invigorate the economy.
A GREAT TIME TO BUY A CAR OR HOUSE
The Federal Reserve has kept interest rates at historically low levels through the entire recovery. The Fed’s benchmark short-term rate was pinned at a record low near zero for seven years. It is now set in a range of 2.25% to 2.5%, still quite low by historical standards.
And even that range might be as high as it will go anytime soon, given persistently low inflation and signs of a slowing economy. The Fed is widely expected, in fact, to cut rates over the coming months.
By contrast, by the end of the 1990s expansion, the Fed raised its short-term rate to 6.5% in June 2000.
REMARKABLY TAME INFLATION
Despite a decade of growth and ultra-low interest rates, inflation has defied nearly everyone’s forecasts — including the Fed’s — by remaining historically low. By most measures, inflation has stayed below 2%, the Fed’s target rate, for most of the expansion. Low price growth has helped consumers stretch their dollars further.
But such quiescent inflation also reflects the sluggishness of the expansion: Growth hasn’t been high enough to overheat the economy, which is normally what causes inflation to accelerate.
And workers haven’t been emboldened enough to seek significant pay raises. Nor have companies’ suppliers generally demanded higher prices. Retailers, in turn, haven’t had to raise prices much to offset their labor or supply costs.
BIGGER GAINS AT THE BOTTOM
One heartening sign for roughly the past three years is that wage increases have been healthiest among the lowest-paid workers. In May, average pay for the poorest one-quarter of workers surged 4.4% from a year earlier. That compares with a 3.2% average increase for the richest quarter of workers, according to data compiled by the Federal Reserve Bank of Atlanta.
Roughly 20 states have raised their minimum wages in recent years. And falling employment has led some low-wage employers, like restaurants and retailers, to offer higher pay to attract and keep workers.
INCOME INEQUALITY HAS SLIGHTLY NARROWED
With wage gains picking up slightly for the lowest paid, income inequality has actually narrowed a bit since the recession (as opposed to wealth inequality, which has worsened).
The proportion of U.S. income going to the poorest one-fifth of Americans rose from 6.4% in 2007 to 7.3% in 2015, the latest year for which data is available, according to the Congressional Budget Office. The wealthiest one-fifth received about 48% of all income, down from 51%.
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