WASHINGTON — From household wealth to spending at stores, many of the U.S. economy’s vital signs have recovered from the damage done by the Great Recession
Home foreclosures and layoffs have dropped to pre-recession levels. Economic output has rebounded. And the Dow Jones industrial average is in record territory.
So is the economy back to full health? Not quite.
Not with unemployment at 7.7 percent and with 3 million fewer jobs than when the recession began. And while the housing market is improving, that engine of economic growth and job creation still has far to go before it can be declared healthy.
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.
“We’ve made a lot of progress,” says Michael Gapen, senior U.S. economist at Barclays Capital.
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 now been reversed. Household “net worth” reached $66.1 trillion in the final three months of 2012, according to the Federal Reserve. That was just 2 percent below the peak reached in the fall of 2007.
• Retail sales: Just as household wealth has recovered, so has consumers’ willingness to spend more to shop, eat out or go on vacation. That trend has spurred job growth at retailers and restaurants. 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.
• Foreclosures: Among the most visible signs of the recession were the “Foreclosure” and “Bank Owned” signs that dotted housing developments around the country. But home prices have been rising steadily. 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 finally 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. That topped its previous peak of 14,164.53 in October 2007. The Dow had plunged all the way to 6,547.05 in March 2009. It closed even higher on Tuesday at 14,662. 01. And the Standard & Poor’s 500 stock index, a broader measure of the market, reached a record 1,570.25.
• GDP: America’s economy is producing more goods and services than before the recession began. In the final three months of 2007, it 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. It then began to recover. The U.S. gross domestic product, the broadest gauge of production, regained its previous peak by the end of 2011. And in the final three months of 2012, GDP was $13.7 trillion.
What’s not back
• Total jobs: The United States still has many fewer jobs than in December 2007. The recession eliminated 8.7 million. Since then, 5.7 million jobs have come back, leaving the economy 3 million short. 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. Probably no figure better illustrates the downturn’s lingering damage. The unemployment 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.
• Housing: The housing market has been recovering for about a year but still hasn’t reached normal levels. 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.
• 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. The rebound has stimulated hiring and restored the once-bankrupt General Motors and Chrysler to health.
• Industrial output: U.S. factories aren’t back to their pre-recessio n 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. The Fed also tracks industrial output, a broader measure that includes mining and utilities. That figure is just 1.8 percent below its pre-recession peak.