If someone had told you in July 2009 that the economy was recovering, you might have asked what they were smoking.
Unemployment was 9.5% and rising, factories were closing and the foreclosure crisis was gaining steam. Optimism was in short supply, but economists tell us that month was when the first green shoots of recovery began to appear.
Ten years later, the expansion that began in July 2009 is the longest in U.S. history, but far from the strongest.
Steven Fazzari, a professor of economics at Washington University, uses the analogy of a driver who wandered off course. If you took a 50-mile detour and are driving 50 miles an hour, the trip takes an extra hour. If you detour twice as far and cut your speed in half, you’ll need four hours to recover.
The current recovery, in a sense, still hasn’t put us back on course. The Congressional Budget Office projected in 2007, before the recession, that gross domestic product would total $21.5 trillion in 2017. That year’s actual figure was $19.4 trillion.
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So, after a deep recession and a long but slow recovery, we as a nation are 10% less prosperous than we had expected to be. That shows up in many ways, including young people delaying buying a house and families taking on more college debt.
What made this expansion so sluggish? Some economists point to lower productivity while others blame the financial crisis, which forced families to reduce debt.
Fazzari thinks inequality plays a role. Income gains in the past couple of decades have gone mostly to the rich, who save more of their income than lower-income families do.
“We haven’t gotten the recovery in household spending that we had in previous recessions,” Fazzari says, “and one reason for that could be the rise of inequality which reduces the amount of household income that gets recycled back into spending.”
For all of the recovery’s shortcomings, we have come a long way in a decade. The stock market keeps setting records and unemployment is down to 3.8%, both in the nation and in the St. Louis area.
In some ways, though, the economy looks much different than it did before the recession. In May of this year, metro St. Louis had 15% fewer construction workers and 13% fewer manufacturing jobs than it had in May 2007. The growth has been in industries like health care, business services and financial services.
St. Louis’ industrial mix closely mirrors the nation’s, so we tend to be about average in the way we feel the economy’s peaks and valleys. We can hope that we won’t be as vulnerable in the next downturn as we were in 2008 and 2009, when Chrysler shut down two plants and eliminated thousands of jobs.
The industries that have grown in the past decade tend to be more recession-resistant, says Charles Gascon, a regional economist at the St. Louis Federal Reserve Bank.
“Our economy has become less reliant on manufacturing and more reliant on health care and education services,” he said. “From that standpoint, it provides us with a buffer.”
We don’t know when the next recession is coming, of course, or what will cause it. Right now, tariffs are one of the biggest worries.
For the moment, the narrative of this expansion is unchanged: It keeps moving forward, but with a steady hum rather than an explosive roar. It’s the longest expansion in history, but it also may be the least-loved.