Recovery results mixed

David MoonBlog

An anniversary passed very quietly earlier this month, as the U.S. entered its ninth year since the end of the Great Recession in June 2009. This recovery is as unique as it is lengthy.

The expansion, now 97 months long, is the third longest in U.S. history. Only a 10-year recovery that ended with the 2001 bursting of the internet bubble and a 106-month expansion in the 1960s were longer. As measured by growth in the Gross Domestic Product, however, this has been the weakest recovery in U.S. history. During the past eight years, the economy has averaged real annual GDP growth of only 2.1 percent and has not produced a single year of three percent growth.

The nature of this recovery has also differed from most, in that capital investment has driven the growth, not employment. Although the number of employed persons in the U.S. has fully recovered to its pre-recession levels, when adjusted for the increased number of working-age people, employment is actually weaker today than the recession lows posted during the Clinton presidency.

In January 2007, prior to the recession’s beginning, 63.3 percent of the adult population was employed, a figure that would fall to 58.5 percent by the June 2009. Despite 96 consecutive months of economic growth, the percentage of working-age, employed Americans has remained stalled at 60 percent – barely 1.5 points above the recession low and still more than three percentage points below pre-recession levels.

The number of non-working (working neither a full nor a part time job) adults increased 11.5 million during the recession. Despite a decline in the headline unemployment rate, the jobless figure has continued to increase during this economic recovery. Since the end of the recession, the number of jobless adults has increased by another 6.2 million people.

Rather than add employees, U.S. companies have added to their physical plant. While gross employment has barely improved in eight years, annual corporate capital expenditures have increased 50 percent, from $1.09 trillion to $1.64 trillion.

Not coincidentally, credit has also made a rather robust recovery. In eight years, total domestic non-financial debt has grown by 32 percent, to $47 trillion. At 252 percent of GDP, the current figure exceeds the third quarter 2009 high of 250 percent. Total consumer debt has also increased roughly six percent, to $14 trillion. The modest decline of mortgage debt (from $11.9 trillion to $11.5 trillion) has been more than offset by an increase in auto and student loan debt. From June 2009 through March of this year, auto and student loan balances expanded by 53 percent and 90 percent, to a total of $1.1 trillion and $1.4 trillion, respectively.

You may recall that debt played somewhat of a role in the last recession. Financial markets tend to have short memories.

David Moon is president of Moon Capital Management. This article originally appeared in the USA TODAY NETWORK.