By the Numbers
January 3, 2017
7.5 — Number of years that have passed since the end of the recession
It’s 2017. Do you remember the Great Recession?
More than seven years have passed since June 2009, the end of the economic downturn. Time to reflect on how far we’ve come — and where we’re going from here.
The pace of our country’s recovery has been less than spectacular. In fact, the average annual growth rate of 2.1% represents the weakest expansion of any since 1949.
“The economy has grown, but it hasn’t grown that quickly,” acknowledges Capital Group economist Darrell Spence.
Nonetheless, there are reasons to feel good about the progress we’ve made: The unemployment rate has dropped to 4.9% from a high of 10.2% in 2009. The S&P 500 Index, as of early November, had more than doubled.
After seven-and-a-half years of expansion, could we be heading toward another U.S. recession? Since 1949, past expansions — on average — have lasted about five years.
But recessions are usually the result of excesses that build up in the economy, not of how much time has passed. The U.S. economy is only 10.6% larger than at the height of the previous cycle. “Historically, the economy has gotten 23% bigger than the prior peak before another recession has hit,” Darrell notes.
On January 20, 2017, Donald Trump is set to take over the Oval Office, marking the end of the eight-year presidency of Barack Obama. While there are concerns about the future of U.S. trade policies, they may be partially offset by prospects for lower corporate taxes and other business-friendly strategies.
President-elect Trump “has proposed a package of tax cuts and spending increases that should provide a boost to economic activity,” Darrell adds. “Judging by what he has said, it makes a recession in 2017 less likely.”
To learn more about what’s in store for the economy and the markets, read American Funds 2017 Outlook.
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