The Great Recession ended in June 2009. The average post-war recovery, Jared Bernstein notes, lasts just 58 months before there’s another recession — and this recovery is now 57 months old. But even as the recovery enters its statistical autumn, most Americans haven’t noticed that it ever happened at all. A recent NBC/WSJ poll found 57% of respondents thought the US economy was still in a recession.
Josh Barro points to barely-there wage growth to explain the disconnect. Between 2009 and 2012, real incomes of the 99% grew at a meager 0.1% annually. The longer term trend, he points out, is clear:
Wages and salaries peaked at more than 51% of the economy in the late 1960s; they fell to 45% by the start of the last recession in 2007 and have since fallen to 42%. When the economy does grow, that growth disproportionately accrues to the owners of capital instead of to wage earners; and in the last few years, weak growth and abundant labor have made that pattern even stronger than normal.
The recovery motors on, with steady GDP growth and a turbo-charged stock market, but it’s not just wage growth that has been absent. The last two recoveries, Atif Mian and Amir Sufi say, have been relatively jobless. Analyzing a chart from the Dallas Fed, Mian and Sufi conclude that “in 2001 and in the Great Recession… output recovers, but jobs don’t”. The economy has added jobs in the last five years. But as Neil Irwinobserves, “the jobs recovery in the US is astonishingly consistent, astonishingly resilient, and astonishingly underwhelming”.
Cardiff Garcia finds a way to take some cheer from the lackluster recovery. Looking at Bernstein’s comment that the US recovery is “getting longish in the tooth”, Garcia notes the sample set for that 58 month average includes all post-war recoveries. While it’s by no means deterministic, the length of the average economic expansion during the post-80’s Great Moderation is eight years, a full three years longer than the overall post-war average. Surveying the quality of the recovery, Garcia quotes a Goldman Sachs research note which says that while recoveries from housing busts tend to be slow, “slow recoveries also tend to be long-lived, with economic constraints loose, policy accommodative and equity markets robust”. — Ben Walsh
On to today’s links: