As Josh Barro reminded us the other day, most Americans—57%–still think the economy is in recession. It’s not, as per the official scorekeepers. The National Bureau of Economic Research Business Cycle Dating Committee (sounds like a lonely heart club for nerds) tells us that the recession officially ended in June 2009. And at least in GDP terms, which ain’t nothin’, the US economy has been growing since then. In fact, if you take a gander at the second panel in this set of figures from Floyd Norris today, you’ll see US real GDP growth solidly outpacing other advanced economies.
So the current expansion is 57 months old. Now consider this: the average length of post-war expansions in 58 months. That doesn’t mean a recession is necessary around the corner. I’d judge that probability to be very low right now (and the standard deviation of the 11 expansions that form this average is 35 months, so a lot of variation around that mean). But it does mean that the current expansion is getting on in years relative to all the others since the mid-40s. Moreover, its age in months happens to correspond exactly to the percent of people who think it’s not an expansion at all (that’s 57, if you’re keeping track).
Barro stresses the unequal distribution of the growth that has occurred to explain the disconnect; I summarize that information here, showing real GDP up 11% over the expansion, real profits and the S&P equity index up 50 and 80 percent, respectively, while real median household income is actually down in real terms. We both stress inadequate policy responses.
I don’t have the data at hand to learn how unusual it is that almost five years into an expansion, this large a share of people think we’re still in recession—perhaps an enterprising commenter can take a look. I suspect it’s somewhat of an outlier, though with jobless recoveries and high levels of inequality the norm these days, it may not be that out-of-the-ordinary.
What I can tell you is that this notion of a business cycle/expansion is becoming considerably less meaningful, given the divergent ways in which the expansion is unfolding.
Source: NBER; data refer to months of expansions since 1945.