Bloomberg Businessweek - USA (2019-06-10)

◼ ECONOMICS Bloomberg Businessweek June 10, 2019

34

THEBOTTOMLINE The10-yearrunofU.S.growth,possibly

nearingitsend,willberememberedasa longbuttepidexpansion.

Itsslownessprobablyprolongeditslife.

wayfromfullemployment,” saysDartmouth

CollegeeconomistDavidBlanchflower,authorof

NotWorking:WhereHaveAlltheGoodJobsGone?

Theinvisiblereserveoflaborkeepsa lidon

wagesforthosewhoareworking.Summersargues

thatevenwithtoday’slowunemploymentrate,

someworkersremainafraidthey’lllosetheirjob

if theyaskfora raise.“Thesecularstagnationpsy-

chologyhastakenholdoftheeconomymorethan

it’stakenholdofeconomists,”hesays.

Thetaskofdatingthebeginningandendofan

economicexpansionfallstoacademiceconomists

whositontheBusinessCycleDatingCommittee

oftheNationalBureauofEconomicResearch.

Unlikeothercountries,theU.S.hasnosimple

ruleofthumb,suchastwoconsecutivequarterly

declinesinGDPmarka recession.Thecommittee

takesa widerangeofeconomicdataintoaccount,

includingjobsandincomes.It judgesanexpansion

tobegininthemonthwhenthingsremainbadbut

havestoppedgettingworse.Likewiseatthetop,

evenif thingsareverygoodbutnotquiteasgood

asthemonthbefore,a recessionmayhavesetin.

Thecommitteegenerallywaitsa yearorsotopin-

pointthetoporbottomofa businesscycle.

Expansionstypicallyendwhenthe central

bankraisesinterestratesexcessivelyinaneffortto

staveoffinflationcausedbystrongdemand.Less

often,they’recutshortbya financialcrisis,asin

2007-09,whenirrationalexuberanceledtotoo

muchborrowingandthena waveofdefaultsand

liquidations.Becauseofthetortoiselikepaceof

thisexpansion,pricepressureshavebeenmuted.

Also,there’slittleevidenceofthekindsofbubbles

thatendedthelasttwoexpansions.

Still,ourpretty-goodtimescan’tlastforever.

MerrillLynch’sMeyersays,“Idothinkwe’reinthe

latestagesofthecycle.”Thatseemstobethecon-

sensusaswellamongbondinvestors,who’vedriven

theyieldon10-yearTreasuriesdowntojust2.1%,the

lowestintwoyears.(Stockinvestors,ontheother

hand,arerelativelyoptimistic—seethenextstory.)

In 1931 thegreatBritisheconomistJohnMaynard

Keyneswroteabouttheriskofa prolongedperiod

ofsubpargrowth:“thelong,draggingconditions

ofsemi-slump,oratleastsub-normalprosperity”

followinga recession.Optimistically,Keynessaid

policymakers had the means to treat such a con-

dition, but only if they choose to exercise their

power. Blanchflower, who cites Keynes in Not

Working, writes: “That quote sends shivers down

my spine every time I read it.” �Peter Coy

Taking Stock

How the U.S. has changed since the start

of the current expansion, in June 2009*

Jobs

Economy

Markets

Families

Housing

Average income, bottom quintile

Manufacturing employment

Labor’s share of national income

Core annual inflation rate

Share of men age 25-54 participating in labor force

Median usual weekly earnings of men

Homeownership rate

Average income, top quintile

Real median household income

Payroll employment

Leverage of risky corporations††

Black homeownership rate

Employment-to-population ratio

Median usual weekly earnings of women

Federal minimum wage

Share of the workforce in a union

Employment, age 65 and up

Current-account deficit as a share of GDP

Net worth of households and nonprofits

Budget deficit as a share of GDP

U.S. GDP in current dollars

Job openings

Federal debt owed to the public as a share of GDP

Share who say it’s a good time to find a quality job

Federal funds rate, top of range

Median duration of unemployment, in weeks

Yield on 10-year Treasury notes

Unemployment rate

Median price of an existing home

S&P 500

Nasdaq Composite Index

Share of mortgages that are delinquent

Then

$11.6k

11.7m

68.9%

1.7%

90.0%

$818

67.4%

$171k

$60k

131m

38.8%

46.5%

59.3

$652

$6.55

12.3%

27.1m

3.6%

$57.8t

9.8%

$14.5t

2.5m

52%

11%

0.25%

17.2

3.8%

9.5%

$182k

924

1,816

9.2%

Now

$13.3k

12.8m

66.4%

2.1%

89.2%

$994

64.3%

$222k

$64k

151m

40.4%

41.1%

60.6

$800

$7.25

10.5%

36.8m

2.3%

$104.3t

3.8%

$21.3t

7.5m

78%

65%

2.50%

9.4

2.1%

3.6%

$267k

2,803†

7,527†

4.4%

*FIGURES FROM JUNE 2009 AND JUNE 2019, OR CLOSEST AVAILABLE DATE; OF RISKY PUBLIC NONFINANCIAL CORPORATIONS, THOSE THAT HAVE SPECULATIVE-GRADE OR UNRATED DEBT. †JUNE 4 CLOSE; ††GROSS BALANCE SHEET LEVERAGE (^)
DATA: DEPARTMENT OF LABOR, COMMERCE DEPARTMENT, INTERNATIONAL MONETARY FUND, FEDERAL RESERVE, GALLUP, BLOOMBERG