Break out the champagne! It’s time for a celebration. The U.S. economy has just set a record. As of July 1 — a month that includes our 243rd birthday as a nation — the country has experienced the longest expansion in history, extending 121 months. Encompassing the period June 2009 to July 2019, the expansion is more than twice the average duration since the end of World War II.
It is remarkable that growth has occurred despite an economic crisis in Europe, volatility in the Middle East and, more recently, trade disputes with China. The official arbiter of expansions and recessions is the National Bureau of Economic Research (NBER), a private nonprofit research organization. NBER dates recessions and expansion based on changes in GDP.
The expansion, however, has not only been slower than recoveries in the past, but it has also been weaker and more gradual. GDP grew at an average rate of 2.3 percent since the last recession ended compared to 3.9 percent during the prior expansion and 4.2 percent during the 1980s.
Economists point out that one reason for the slower recovery is the vast number of people who became unemployed in the Great Recession. The rate of unemployment — it reached a high of 10 percent in October 2009 — took longer to come down than in a typical recovery. And the jobs created during the expansion are different from those that existed prior to the beginning of the recession.
While 21.4 million jobs have been created since 2009, more people are working in lower-paying sectors of the economy than 10 years ago. Five million more individuals are employed in the retail and hospitality sectors, while just over one million more are working in manufacturing and construction.
In addition, growth seems to have been concentrated in certain areas. Cites like Dallas, Los Angeles, Miami, and New York experienced great growth. Many small towns and rural areas have not done as well.
The great unknown is whether the expansion can be sustained. Some economists fear a recession is right around the corner. Others think not. One potential culprit is uncertainty regarding trade policy. If it continues, it can become a drag on economic growth by reducing confidence.
Declining confidence on the part of businessmen curtails investment. Falling confidence among consumers impacts spending, which accounts for about 70 percent of GDP. The longer the impasse in trade exists, the greater the probability of a downturn.
Email Wayne Curtis at firstname.lastname@example.org.