Raise a glass to the longest economic expansion in modern American history.
A full decade has passed since the end of the last recession, in June 2009, and the economy continues to grow. As of Monday, the current expansion surpassed the previous record for uninterrupted growth, set between 1991 and 2001.
But this time around, no one is accusing Americans of irrational exuberance: These good times don't feel particularly good. Economic growth over the past decade has been slow and fragile, and most of the benefits have been claimed by a small minority of the population.
The sense of disappointment is more than a feeling. Through the first quarter of 2019, the nation's gross domestic product had increased by 25 percent during the current expansion. Between 1991 and 2001, economic output expanded by 42 percent. Between 1982 and 1990, output increased 38 percent. And between 1961 and 1969, output grew by 52 percent.
The distribution of the gains is even less satisfying.
Truck drivers still earned, on average, slightly less in 2018 than in 2009, after adjusting for inflation. Executive compensation, by contrast, went up, up and away. Chief executives of companies in the S&P 500 stock index – a list that includes most of the nation's largest corporations – made an average of $14.5 million in 2018, increasing by $5.2 million in the past decade, according to data compiled by the AFL-CIO.
The wealthy have also reaped most of the gains from rising stock prices. The least affluent 70 percent of American households had less wealth at the end of 2018 than at the beginning of 2007, according to the Federal Reserve. The top 30 percent of households saw at least some increase, but the big gains were heavily concentrated at the very top, in the hands of a small proportion of extraordinarily wealthy families.
This inequality of prosperity has become a defining issue in the nation's politics. President Trump ran on the promise that he would restructure the economy to revive employment in mining and manufacturing. Democrats vying to run against the president in 2020 are offering their own prescriptions for economic revival – and speaking of the plight of American workers in language usually reserved for recessions.
That rhetoric contrasts with the slow but steady improvement in economic conditions over the past decade. The unemployment rate is bumping along at the lowest levels since the 1960s; wages have started to rise more quickly, particularly for low-wage workers.
But the fact that it took so long to get here is a big problem for many American families. While unemployment is low, the slow pace of the recovery means that the average rate of unemployment in a given month during the past decade was a full percentage point higher than during the 1991-2001 expansion and almost 2 points higher than between 1961 and 1969.
There is also reason to worry that America has squandered the opportunity for a more prosperous future. During periods of economic growth, governments can take advantage of swelling tax revenues to improve infrastructure, invest in education and fund research. Companies can plow profits into new products and markets. But over the past decade, both public and private sectors have largely refrained from investing. The government has handed out tax cuts while companies have handed out dividends and repurchased shares. In effect, they've chosen to distribute profits among already wealthy Americans rather than develop the intellectual capital and equipment that could increase growth in the decades ahead, as investments in public universities, highways, fundamental scientific research and satellite networks did in the past.
Another result of the Trump administration's tax cut is that federal deficits, which usually shrink during periods of economic growth, are on the rise. That leaves less room for the government to respond to a downturn by cutting taxes or by increasing spending. And the Fed cannot easily ride to the rescue: It has kept rates low to extend this fragile expansion, leaving little room to cut rates.
The end of an expansion, like the death of a star, is visible only after it happens. It is possible the economy will continue to grow for years, giving policymakers a chance to do better; long-lived expansions have become increasingly common across the developed world. It's also possible that the analysts predicting a recession next year – there are always analysts predicting a recession next year – will turn out to be right.
So enjoy this lackluster expansion while it lasts. What comes next may well be worse.