Original Published Date: December 6, 2014
Date: July – December 2015
(New York City) The country began moving past the Great Recession in 2015. The improving economy saw the unemployment rate go down, the median household income go up, gas prices remain low, and consumer confidence inching up. The good news however did not belie that the country had a long way to go before recovering from the worst recession since the Great Depression itself. Growth was at 3.5% for the year of 2015.
Unemployment had been at 5.7% in January 2015, and ended the year at 4.7% in December 2015. 2015 surpassed 2014 as the best year for job growth, the best year since 1999. The average gain was around 240,000 new jobs each month. Retail, accounting, and other white collar industries led the way. The blue collar manufacturing sector also gained significantly over the year, as factory orders rose throughout the year. Economists hailed this as a sign that the Great Recession was entering the rearview mirror.
GDP growth was also strong, logging in at 3.5%. The United States led the post-industrialized world in the year 2015, leapfrogging most of Europe. The GDP of the United States remained strong, equaling some $17.45 trillion for 2015. Economists hailed the strength of the American economy and the weakness of other areas as one reason it was doing better than the world. The global economy grew at a weaker pace, at 2.0%.
Low average gas prices also helped consumer spending, which made up 70% of the economy. Gas prices in the United States averaged around $2.50, some of the lowest rates since 2001. The global market saw a continued glut that depressed oil prices. Consumers were translating these prices into greater consumer spending in other areas, which helped boost the economy.
Consumer confidence was also going upwards, but at a slower rate. (1985=100). The rate was 98.1 at the end of 2015. It was a far cry from the significantly below 40 rating at the height of the economic crash of 2008. Consumers were slowly beginning to spend again and confidence reflected that.
Real wages were also growing. The median wage was $797 in November 2014; it was $807 a year later. The median household income rose to $55,481, matching the $55,589 level in 2008, and surpassing the $51,913 level in 2011. Wage growth for workers was 2.5%, at the highest levels in decades.
With all this, the Federal Reserve aimed for a moderate hike of .25 points in the interest rates, with an eye to inflation at 1.7% in 2014 (up from 1.5% in 2013). The Federal Reserve decided to not hamper the recovering economy and chose a moderate and even dovish path to making sure the recovery continued apace.
Under the headlines, though, a more nuanced picture emerged.
Unemployment was going down, but labor workforce participation remained at 63%, some of the lowest rates since the 1970s. Those who were not working were discouraged workers who had given up, those who were retired, and others. Still, with the low workforce participation, some economists were concerned. Unemployment had not dipped further because of these discouraged workers still being counted as part of the unemployment rate. And the important U-6 statistic suggested that unemployment had a long way to go before most Americans felt comfortable with the economy again. Part time workers still numbered over 6 million individuals – people who wanted full time work but had to settle for part time work. Those who wanted a job had dipped to roughly 5.5 million.
Wage inflation was quickening, given the tightening labor market, but after decades of stagnation, median household incomes were still nearly 10% below what they were in 1999. Median wages for the millennial generation also remained shaky, compared to those who were 25-34 between 1995 and 2005. While wage growth was finally taking off, the economy remained weak for many.
Analysts at the time estimated that the economy was in recovery, and would continue strengthening. However, it would be nothing like the economic recoveries of the 1980s, 1990s, and would be more in line with the tepid recovery of 2001-2003 (although at a worse level).
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