WASHINGTON - Out of a seemingly hollow recovery from the Great Recession, a more durable if still slow-growing U.S. economy has emerged.
That conclusion, one held by a growing number of economists, might surprise many people.
After all, in the five years since the recession officially ended, Americans' pay has basically stagnated. Millions remain unemployed or have abandoned their job searches. Economic growth is merely plodding along.
In this July 8, photo, Mark Ahlemann, center, passes out papers to participants during a during a breakfast networking session hosted by Gray Hair Management at a restaurant in Elk Grove Village, Ill. By continuing to draw a paycheck, older workers pay taxes and that ought to reduce the budgetary pressures on younger generations, Gary Burtless, a senior economics fellow at the Brookings Institution, concluded in a 2013 paper. But in a sluggish recovery where job gains have not kept pace with population growth, the persistence of older workers has actually hurt younger generations
Yet as the economy has slowly healed, analysts say it has replaced some critical weaknesses with newfound strengths.
Among the trends:
- Fewer people are piling up credit card debt or taking on risky mortgages. This should make growth more sustainable and avoid a cycle of extreme booms and busts.
- Banks are more profitable and holding additional cash to help protect against a repeat of the 2008 market meltdown.
- More workers hold advanced degrees. Education typically leads to higher wages and greater job security, reducing the likelihood of unemployment.
- Inflation is under control. Runaway price increases would be destructive. Low inflation can lay a foundation for growth.
- Millions who have reached retirement age are staying on the job. This lessens the economic drag from retiring baby boomers and helps sustain consumer spending.
Over the long run, such trends could help produce a sturdier economy, one less prone to the kind of runaway growth that often ends in a steep and sudden slump.
The downside? At least in the short term, these same trends have prevented the economy from accelerating. When consumers borrow and spend less freely, for example, they restrain growth.
And when people seek to work longer or become more educated, often there aren't enough jobs for all of them, at least not right away. People with advanced degrees can often find lower-paying jobs that don't require much education.
But when they do, they tend to push some people with only a high school education into unemployment.
One of the most striking trends in the recovery has been an aversion to personal debt.
A typical U.S. household owes $7,122 in credit card debt, $1,618 less than at the start of the recession, according to analysis of New York Federal Reserve data by the firm Nerd Wallet. (After factoring in inflation, the balance is $2,900 lower.)