Eight years ago, the United States was one year into the Great Recession. The unemployment rate had gone from 6.8 percent the month before the Great Recession began, to 9.5 percent in the final month. However, this unemployment rate would rise to 10.0 percent before it would then begin to come down again. Today, unemployment within the United States stands at 4.9 percent, cut in half from the 10.0 percent after the great recession.
While unemployment is a major metric that we use to evaluate economic strength, it is not the only one. Another economic statistic that is often looked at is Gross Domestic Product, or GDP. GDP as defined by Investopedia is, “the monetary value of all the finished goods and services produced within a country’s borders in a specific time period.” So how has the GDP, or the total value of U.S. produced goods and services changed in eight years?
According to the World Bank, in 2009, while in the midst of a recession, the U.S. growth rate was -2.7 percent. In 2015, the most current calculation that the World Bank offers, the U.S. growth rate was 2.56 percent. This may seem good from a first impression; however, the post World War II average for growth is right around 3.2 percent. While we have rebounded from the recession that brought such a steep decline in growth, we have not returned to historical norms.
While growth may not be close to historical standards it may be premature to criticize these numbers. Many economists today, including the current Federal Reserve Chairwoman, Janet Yellen, predict sub 3 percent growth rates for the United States in the next few years. Also worth noting, Robert Gordon, a macroeconomist that teaches at Northwestern University predicts a growth percentage under 1 percent for the future of the U.S.; saying that the abnormally large jumps in growth from 1870 to 1970 were a fluke produced by revolutionary technological changes that increased productivity.
Another bright spot from the past eight years came in September of 2016 when it was announced that middle-income growth in the U.S. rose 5.2 percent. In simpler language, this means household income increased by 5.2 percent, the first such increase in nearly 10 years. This 5.2 percent increase was also the largest such increase the U.S. has seen since the statistic has been kept, 1967. However, even with the increase, real incomes are still lower than they were in the late 90’s and 2007.
So what does information mean about the U.S. economy in the past eight years? We have seen unemployment cut in half, GDP has grown, and middle class incomes have increased for the first time in a decade. That leaves us in a country where we have recovered from the Great Recession in many ways such as unemployment, and a much needed middle-income increase. However, GDP growth rates have been below historical average, which leaves us with a demanding and somewhat frightening question. Is the lackluster growth of the past eight years the new trend? If so, lower growth means smaller growth in the economic “pie;” smaller growth in the pie means the average person’s cut of the pie isn’t getting as big as it used to.
*Unemployment Stats courtesy of the Bureau of Labor Statistics
– Mason Boyd