Perhaps the best way to think about the U.S. economy is this: After five painful years, it’s nearly back to where it started when the recession began. What’s different now is that the trends are much healthier. Gone are the fears that the economy could fall into another recession.
The recession officially began in December 2007. It ended in June 2009. Here’s a look at ways in which the economy has returned to pre-recession levels and ways it hasn’t.
HOUSEHOLD WEALTH: Americans lost $16 trillion in wealth during the recession, mainly because home values and stock prices sank. Those losses have been reversed. Household “net worth” reached $66.1 trillion in the final three months of 2012, according to the Federal Reserve, just 2 percent below the peak reached in the fall of 2007.
RETAIL SALES: Retail sales totaled $421.4 billion in February. Adjusted for inflation, that was nearly 18 percent above the recession low and just 0.7 percent below the record level in November 2007.
LAYOFFS: The job market remains weak by some measures. But consider this: If you have a job, you’re less likely to lose it than at any other point in at least 12 years. That marks a sharp turnaround from the depths of the recession, when layoffs soared from 1.8 million in December 2007 to 2.6 million in January 2009. In January this year, employers cut 1.5 million jobs, the lowest monthly total in the 12 years
the government has tracked such data.
FORECLOSURES: Foreclosures have sunk back to pre-recession levels. Banks repossessed 45,000 homes in February 2013, according to RealtyTrac, a foreclosure listing firm. That was the fewest since September 2007 and was down from a peak of 102,000 in March 2010.
STOCK MARKET: Last month, the stock market fully regained the painful losses investors suffered during the recession. The Dow Jones industrial average closed at an all-time high of 14,253.77 on March 6, topping its previous peak of 14,164.53 in October 2007. The Dow
plunged all the way to 6,547.05 in March 2009.
GDP: In the final three months of 2007,
the U.S. economy produced an annual rate of $13.3 trillion in goods and services, a record high. That figure had shrunk to $12.7 trillion when the recession ended. In the final three months of 2012, gross domestic product was $13.7 trillion. Still, that gain comes with an asterisk, because the population has grown. Viewed on a per capita basis, GDP at the end of 2012 remained 1.5 percent below its pre-recession peak.
WHAT’S NOT BACK
TOTAL JOBS: The U.S. still has many fewer jobs than in December 2007. The recession eliminated 8.7 million. Since then, 5.7 million jobs have come back, and the population of Americans 16 and older has grown by 13 million since then. As a result, a much smaller proportion of people are either working or looking for work than before the recession.
UNEMPLOYMENT RATE. When the recession began, unemployment was 5 percent. Now, it’s 7.7 percent. The rate is well below the recession’s peak of 10 percent in October 2009 but far above the 5 percent to 6 percent range associated with a healthy economy. Twelve million people are unemployed, yet that figure doesn’t include 2.6 million people without jobs who have stopped looking for one.
HOUSING: Previously occupied homes were sold in February at a seasonally adjusted annual rate of about 4.98 million. An annual rate of about 5.5 million would be healthy. In the recession, sales had bottomed at 3.8 million. Prices have risen nearly 9 percent since bottoming in March 2012, according to the Standard & Poor’s/Case-Shiller index, but they remain 29 percent below their pre-recession peak.
AUTO SALES: Auto sales have nearly returned to where they were. Americans bought cars at an annual rate of nearly 16 million in December 2007. Sales plunged to 10.4 million in 2009. In March this year, the annual sales pace was 15.3 million.
INDUSTRIAL OUTPUT: U.S. factories aren’t back to their pre-recession peak of output, but they’re getting closer. Production was about 5 percent lower in February than in December 2007, according to the Federal Reserve.