June 23, 2014

Five years in, recovery still underwhelms compared with previous ones

Most Americans say the economy is improving, but not too stronglyAs of this month, the U.S. economy’s recovery from the Great Recession is five years old. But given how most Americans rate it, they can be forgiven for not feeling much in the mood for cake and ice cream.

In a Pew Research Center survey from April, only 6% of Americans said the economy was recovering strongly. Two-thirds (66%) said the economy was recovering, but not very strongly; about a quarter (26%) said it wasn’t recovering at all. The same survey found that Americans’ financial self-assessment had barely budged since June 2009, when the recession officially ended: 37% rated their financial situation “excellent” or “good,” 39% “only fair,” and 23% “poor.”

Americans' Financial Self-AssessmentThat persistent economic pessimism is warranted. By several measures — gross domestic product, personal income, job growth and employment ratio — the current recovery is among the weakest on record, particularly given its duration. Unless the economy’s official scorekeepers change their minds, the recovery already has lasted 60 months — the fifth-longest expansion since the end of World War II. (Economists divide economic cycles into two phases: expansion (or recovery) and recession. The current recovery is considered to have begun in June 2009, the trough of the recession that started when the economy peaked in December 2007.) 

We compared the current recovery’s performance on several metrics against the first five years of the other longest-running expansions — those of 1961-69, 1982-90, 1991-2001 and 2001-07. By almost every measure, the current recovery has lagged well behind those of the past.

Economic Recovery IndicesConsider the broadest measure of economic activity, gross domestic product. Since the second quarter of 2009 (GDP is measured quarterly, not monthly), inflation-adjusted GDP has risen just 10.8% — the slowest growth of any of the five-year periods examined. In fact, as far as GDP goes each recovery since the 1960s has been weaker than the last (see chart).

This recovery is also dogging it on putting people back to work. Since June 2009, the number of nonfarm payroll jobs in the U.S. has grown by just 5.7% — lower job growth than all but one of the prior lengthy expansions. In the first five years of the 1960s recovery, for instance, payrolls grew 17.3%. They grew 16.4% during the first five years of the 1980s “Reagan recovery,” and 9.6% during the first five years of the tech-fueled boom of the 1990s.

In every previous recovery before this one, the employment-population ratio — the share of the total civilian population who are employed — has risen (though often not right away, as the jobs cycle typically lags the economic cycle). But this time around, the ratio, which stood at 62% just before the late-2008 financial panic, has bounced between 58% and 59% since September 2009. (Some of that, along with the related decline in the labor force participation rate, likely is due to the impact of Baby Boomers retiring, though analysts disagree on just how much.)

Given the torpid jobs performance, it comes as little surprise that personal income also has lagged. According to the Bureau of Economic Analysis, per-capita disposable income (after adjusting for inflation) has grown just 3.2% since mid-2009, to $37,038 as of the first quarter of 2014. In previous recoveries, it was much higher: 11.6% in the first five years of the 2001-07 recovery, and 8.7% in the first five years of the 1990s tech boom.

Stocks and Job Gains in Economic Recovery

One metric about the current recovery, however, jumps out: the stock market. The benchmark S&P 500 index has more than doubled over the course of the recovery, by far its largest gain of any of the periods we looked at. The index surpassed its pre-crash high in March 2013, and has gone on since to a series of new record highs. (Of course, that’s not much comfort to the 44% of Americans who say they don’t own stocks.) On another closely tracked measure, the economy regained all of its lost payroll jobs just last month. But even that measure doesn’t take into account the population growth during that period. What the chart doesn’t show is that there are about 15 million more working-age people now than there were in January 2008, but essentially the same number of jobs. 

Americans today are slightly more optimistic about the job market than they were near the start of the recovery, but not much: In the April Pew Research survey, 27% said there were plenty of jobs available in their local area (up from 11% in October 2009), but 65% said jobs were still hard to find, versus 79% in the 2009 survey.

Topics: Economics and Personal Finances, National Economy, Economic Recession, Economic and Business News

  1. Photo of Drew DeSilver

    is a senior writer at Pew Research Center.


  1. slk3 years ago

    and don’t forget, it’s bush’s fault, excuse me, the new one is, it’s fox’s fault!!!

  2. Bebn Edwards3 years ago

    The better we get at robotics or approaches to it, the less jobs are created and the tougher it is for the displaced to land one. I don’t pay to much atention to education credentials since they are often pretty shallow, but the better educated seem to have s small edge starting out.

    1. slk3 years ago

      would it help if all those minimum wage earners had a skill and maybe a smaller family???

  3. Ben Wells3 years ago

    It’s called the “Great” Recession because it has been uniquely severe vis-à-vis all the cyclical downturns of the 60’s, 70’s, 80’s, etc. Why don’t any analysts, commentators or others compare it to the other truly comparable economic phenomenon, the Great Depression of 1929-40 ? Recovery then took much longer than five years!

    1. slk3 years ago

      and it took a world war to get them out!!!

  4. Packard Day3 years ago

    Anyone living in the top 10% (i.e. annual household income >$160k/year & net worth minus primary residence and vehicles >$1million), these past five and a half years under President Obama and his administration have not just been good years. They have been absolutely extraordinary years. The same holds doubly true if you also count yourself as one of our “Washington DC/Wall Street Patriot Class” citizens. Good times…ehh?

    Of course, if you and yours only happened to be living in the top 50-90% brackets, then you will be forgiven if you thought these past few years were ones in which you just struggled to stay financially above water. The bottom 50%, of course, got what they usually get and not a great deal more. Wish I had more to say about this reality, but I do not.

    1. slk3 years ago

      well the over 7 million jobs last year helped a lot!!! unfortunately most of you don’t know that 7 million of those were part time!!! why potus doesn’t want to tell anyone is a puzzler!!!

  5. Artie Gold3 years ago

    Can you say ‘ZLB’? When you come into a recession with interest rates that are low by historical standards (due to lack of distribution leading to the fact that things weren’t all that strong to begin with) there’s not a whole lot of room in which to operate, especially when large-scale infrastructure spending has been preemptively taken off the table politically.
    No room for the traditional ‘V’.

    1. slk3 years ago

      what are they doing with trillions in tax money???