The Great Recession began 10 years ago with the Lehman Brothers’ bankruptcy on Sept. 15, 2008. Its severe effects touched everyone, including nations, banks large and small, huge corporations and the smallest businesses. Some — like Lehman — didn’t recover at all, and many are still playing catch-up.
We are grateful for the long and sustained recovery, which began in June 2009 and has lasted over nine years — one of the longest recoveries in recorded history — and has allowed many to restabilize their finances and businesses.
National unemployment is historically low at 3.9 percent. Real wages are finally starting to increase. The very real gender pay gap is slowly improving. The unemployment disparity for minorities is also narrowing: The black unemployment rate dipped under 6 percent in May (although it rose to 6.3 percent in August). Hispanic unemployment dropped to 4.7 percent. The Dow Jones Industrial Average crested above 26,000 this week, a remarkable resurrection from its low of 6,443 on March 6, 2007. In good news for savers and bond investors, the 10-year Treasury yields are over 3 percent, and interest rates on savings are edging back to normal as the Fed raises interest rates and pulls back on stimulus.
The U.S. economy advanced a whopping 4.2 percent (annualized) in the second quarter of 2018, according to Trading Economics.
A Human Progress research project found that in the most affluent countries, “The overall number of hours worked has declined in tandem with increasing prosperity. Population-adjusted average number of hours worked per worker in high income countries declined from 2,123 in 1950 to 1,732 in 2017. That’s a decline of 18.4 percent. With 1,763 work hours per year, the United States was squarely in the middle of the pack in 2017.”
Human Progress continues, “Over the same time period, average gross domestic product per person adjusted for inflation and purchasing power rose by 483 percent in Germany, 1,376 percent in Singapore and 290 percent in the United States. Overall, GDP per person in high-income countries rose from $9,251 to $47,149 (in 2016 dollars), or 410 percent.” This is the key to modern prosperity — dramatic increases in productivity per worker, even while the hours worked decreased significantly.
Jobs (nonfarm) grew in August by 201,000 jobs, consistent with the rolling 12-month average of 196,000 per month, according to the U.S. Bureau of Labor Statistics.
“Consumer Confidence is at its highest point since October 2000," according to The Balance. "The Consumer Confidence Board reported the Index was 133.4 in August 2018. It's better than the pre-recession high of 111.9 reached in July 2007. Confidence improved significantly from its all-time low of 25.3 in February 2009. The record high since the index launch in 1977 was 144.7, reached in May 2000.”
That’s a lot of good news to celebrate and enjoy.
There are cautions for us. Inflation has reared its head, but rising interest rates will hopefully keep it in check.
As to the effects of the 2017 Trump tax cuts, Bloomberg reports “the true impact of the tax reform probably won’t be known for years. But give credit where credit is due: In terms of bringing money back home, the new tax law is proving some of its critics wrong.”
It remains to be seen how much of their newly available cash companies will invest in the U.S. through expanding jobs, increasing wages and spending on research and capital investment. It has given families a slightly to significantly higher take-home pay.
The dark side to the 2017 tax cuts is that they sharply reduce federal government revenue and thus balloon the annual budget deficit, adding to the ridiculously high national debt.12 comments on this story
Of course, the other imponderable is the effect of the Trump tariffs. Conventional wisdom holds that tariffs are political plays to a country's economically disadvantaged and are self-defeating. Still, the U.S. has given the irresponsibly opportunistic Chinese a free ride, as tariffs have forced U.S. companies to share their technologies to do business in China and have been stingy in allowing U.S. companies to import products for the huge Chinese business and consumer markets. We’ll see who wins this stare-down.
Everyone seems to see a recession, like the Grim Reaper, approaching around the next bend. Prepare for it. But be grateful, too, for this remarkable recovery.