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How Long Will The Current U.S. Economic Expansion Continue?


Congratulations, America. The United States sets a record today. We've gone longer without a recession than at any time since economists began keeping track of such things, and that's a record going back to before the Civil War. The economy has been expanding for 121 months, beating the previous record of 120, which was set in the 1990s. So what now?

David Wessel is with us next. He is director of the Hutchins Center at the Brookings Institution and a frequent guest here. David, good morning.

DAVID WESSEL: Good morning, Steve.

INSKEEP: So I'm old enough to remember the '90s and the almost giddy feeling people had about the economy - that all problems seem to have been solved, budget deficits went away, growth seemed to be going on forever. People don't seem quite as universally happy this time around with this expansion now that it's longer. What's different?

WESSEL: Well, I think that's right. I mean, one thing that's different is that the pace of economic growth, the rate at which the GDP grows, has been slow - slower than it was in the 1990s - partly because the workforce is growing more slowly, but partly because the growth of productivity, the amount of stuff we make for every hour of work, has been disappointing. That was very different during the 1990s.

And also, the job market got really bad at the beginning of the decade. It's come - the unemployment rate has come down quite a bit. It's had 50-year lows, but there's still more prime-age workers - that's people between 25 and 54 - who are not even looking for work than were true before the Great Recession.

INSKEEP: And I guess people essentially in the middle of the economy have continued to be frustrated.

WESSEL: That's right. I mean, it's kind of obvious, if you look at it, that the stock market has been on a tear. I mean, the first six months of this year have been the fastest growth in the stock market than any year since way back in the late '90s. The stock market has more than tripled during this expansion. Incomes of the typical American household - the one in the very middle - have gone up 30% before you adjust for inflation. After adjusting for inflation, they're up, but about 15% - in part because wages just haven't gone up very much.

And then the gap between winners and losers in our economy continues to widen. I mean, here's one way to look at it. The Federal Reserve says the top 1% now hold 31% of all the wealth...


WESSEL: ...In the country. That's more than they held before the Great Recession and more - that's more wealth than the bottom half of the population altogether.

INSKEEP: That is amazing. And I want to ask about another thing here, as well, and that has to do with homeownership, which I know you have focused on. The percentage of people who own their own homes is on the way down.

WESSEL: That's right. The share of Americans who own their own homes, which soared during the housing boom of the 2000s, is now lower than it was back in 1995. It's turned up a little bit lately, but it's - the decline is particularly pronounced among young people - among people under age 40. In fact, when you look across the expansion, the scars of the Great Recession are most evident in people who are really the younger generations.

INSKEEP: You know, when you talk about the difference between winners and losers, you can see it here. Home prices have gone up, which means if I already own a home, I'm in great shape and feel wealthy. But if I haven't bought in yet, I'm going to have trouble getting in.

WESSEL: That's absolutely true.

INSKEEP: What now?

WESSEL: Well, I think a lot of people think after such a long stretch of economic growth, we're due for a recession. It's often said by economists that expansions don't die of old age. They have to be murdered, usually by the Fed or financial crisis.

INSKEEP: (Laughter).

WESSEL: So that might happen. There are some warning signs out there. We had a bad job market report. We'll get more - another glimpse of the job market report at the end of this week. Manufacturing is soft. But one thing that's interesting is some people worry that long periods of steady growth, low rates and rising stock prices breed complacency, and that could end badly.

INSKEEP: OK, David. Thanks so much. That's David Wessel. Transcript provided by NPR, Copyright NPR.