The U.S. Economy Likely Just Entered Its Longest Ever Expansion—Here’s Who’s Benefiting in 3 Charts
The U.S. economy likely surpassed an important milestone last month: Americans are now experiencing the longest economic expansion in the nation’s history, assuming the data still being collected bears this out.
Economic growth represents two things
These are two sides of the same coin. When items get produced and sold, businesses and ultimately workers receive income. In theory, economic growth should represent a higher standard of living for Americans.
Unfortunately, economic growth during the current expansion has neither been deep nor broadly distributed among most Americans.
1. A shallow expansion
First, the shallow part.
The economy grew an average of just 2.3% a year since the expansion began in June 2009, at the end of the Great Recession. That’s almost half the 4.3% average growth rate of the 10 previous economic expansions since World War II.
2. CEOs vs. teachers
More troublesome is the fact that the record economic growth has not
Economic growth figures summarize what is happening overall and on average. But averages can be deceptive. If Bill Gates walks into a soup kitchen, average incomes will suddenly far exceed US$1 million. But this figure poorly describes the economic condition of those eating there.
To gauge the breadth of our economic expansion, we need to look at how its economic gains have
The narrowness of the current economic expansion can
Teachers make average salaries despite having
In sharp contrast, median pay including non-salary compensation for the top CEOs in the U.S. jumped an inflation-adjusted 65% since 2009 to a record $12.4 million in 2018.
Flat wages and rising CEO pay help explain why the ratio of CEO pay to median wages at the largest 350 companies by sales has soared from 200 to 271 times average worker wages during the present economic recovery.
3. Where the wealth went
What is true of income is also true of
One main reason for this is that the rich have a large share of their wealth in financial assets, such as stock shares, which have nearly doubled in price since their peak before the Great Recession.
In contrast, middle-income households have most of their wealth tied up in their home.
While home prices have gone up a lot
Spreading the prosperity
Life expectancy and fertility rates have been falling in recent years, particularly among those at the bottom of the income and wealth distribution.
And more young adults are living with their parents and delaying marriage.
These are things that normally happen during economic recessions and depressions.
One positive trend during the current economic expansion has been the gains for workers in low-wage occupations. However, these gains have not occurred because of the economic expansion. Rather, they
Ideally, everyone gains equally from an economic expansion, regardless of its length. And gains need to be broad and deep because expansions do not last forever.
Overall, a well-performing economy should be one where most families take two steps forward during expansions and one step back during recessions. But that’s not America’s reality today.
Steven Pressman, Professor of Economics, Colorado State University
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