In December 2007, the United States entered into the longest recession it’s been in since World War II. Because the economic downturn was so severe, the recovery since the end of the Great Recession in June 2009 has been slow, according to the Federal Reserve Bank of New York. In fact, a 2018 study found that many Americans are still rattled from the Great Recession.
But how is the nation as a whole doing now compared with where it was over a decade ago? GOBankingRates looked at economic trends to find out how well our nation has recovered and how the U.S. has changed since the Great Recession.
Unemployment Has Dropped Dramatically
The highest the unemployment rate climbed during the Great Recession was 9.5 percent, according to the Bureau of Labor Statistics. However, the percentage of unemployed workers continued to climb even after the end of the recession. The unemployment rate hit a high of 10 percent in October 2009 and didn’t fall below 9 percent until October 2011.
Now, unemployment in the U.S. is the lowest it’s been since 2000. As of August 2018, the national unemployment rate was 3.9 percent.
Labor Force Participation Has Declined
Although the unemployment rate has dropped dramatically since the Great Recession, the percentage of Americans in the labor force has fallen. In December 2007, 66 percent of people 16 and older were employed or looking for work, according to the BLS. As of August 2018, the labor force participation rate was 62.7 percent.
Part of the decline in the labor force can be attributed to baby boomers who have retired, according to the Pew Research Center. But there also are Americans who’ve given up on being able to find a job and have dropped out of the workforce.
Home Values Have Recovered
The housing market was hit hard by the recession. For the most part, though, home values in the U.S. have recovered — especially in certain states.
As the U.S. was coming out of the Great Recession in June 2009, the median home value was $166,800, according to Zillow. However, home values continued to drop, hitting $149,500 in October 2011. They started to climb again in June 2012, and now the median home value in the U.S. is $218,000, as of August 2018.
But Not All Housing Markets Have Recovered
Although home values have increased nationwide since the recession, the recovery varies greatly from state to state.
And, some cities aren’t just seeing a lack of rebound — they’re actually seeing significant declines: Mount Vernon, Ill. and Greenville, Ohio, for instance, have both seen home values decline by over 20 percent since July of 2014.
Wage Growth Is Sluggish — and 'Real' Wages Are Stagnant
Nationwide, the average hourly wage has increased since the Great Recession. In 2008, the average hourly earnings for all occupations was $20.32. In 2017, the mean hourly wage for all occupations as $24.34, according to the BLS.
Although wages have risen since the financial crisis, real wages have barely budged. After adjusting for inflation, the real average wage in America has a similar purchasing power from 40 years ago, according to the Pew Research Center. And, it’s mostly the highest earners who have seen the wage increases.
Where the Rich Get Richer: Places in the US With the Most Income Inequality
But Some Places in the U.S. Are Getting Poorer
However, the prosperity created by the rebounding economy didn’t extend to everyone. Some cities continue to struggle with rising poverty rates that have been climbing for decades.
Detroit — one of the U.S. cities that are getting poorer — has seen the gradual decline of the auto industry over years, culminating with regional stalwart General Motors declaring bankruptcy in 2013 after the recession hit the company hard. Since 1969, wages have fallen by about 60 percent in real terms, while nearly four in 10 city residents are living in poverty.
Delinquency Rates for Mortgages and Credit Cards Are Down
During the recession, the percentage of residential property owners who fell behind on loan payments grew. But delinquencies didn’t peak until the first quarter of 2010, when the rate was 11.5 percent. Now, residential loan delinquencies are a fraction of what they were in 2010. As of the second quarter of 2018, the delinquency rate was 3.25 percent.
The percentage of consumers who fell behind on credit card payments also hit a high as the U.S. was coming out of the recession. In the second quarter of 2009, the credit card delinquency rate was 6.77 percent, according to the Federal Reserve. By 2015, the delinquency rate had fallen to 2.12 percent.
Though not reaching peak financial crisis levels yet, credit card delinquencies have been on the rise recently — which could be one of the warning signs that another recession is coming. As of the second quarter of 2018, the delinquency rate was 2.47 percent.
But Auto Delinquency Rates Are Up
Another potentially troubling indicator could be the fact that auto loan delinquency rates have climbed, growing from 3.3 percent in 2008 to 4.2 percent in 2018. And if you’re thinking that’s because 2008 predates the biggest aftereffects of the recession, the 3.6 percent rate from 2013 would indicate more consumers are struggling to make their car payments.
And Americans Have More Debt
The total amount of debt owed by Americans is higher now than during the recession. Household debt hit a high of $12.68 trillion in 2008, according to the Federal Reserve Bank of New York. However, it passed that mark in May 2017 and hit $13.29 trillion in the second quarter of 2018. And that news could be even more troubling than it appears on the surface as the costliest type of debt is on the rise: credit cards.
Consumers haven’t shied away from credit cards since the recession, even if their delinquency rates are down. In fact, Americans have more credit card debt — a lot more. When the recession started in December 2007, Americans had $839 billion in credit card debt, according to the Federal Reserve Bank. Debt peaked at $866 billion by the end of 2008 and then started falling thereafter.
But now credit card debt in the U.S. is approaching the high hit during the recession. As of the second quarter of 2018, it was up to $829 billion.
Some US Cities Are in Danger of a Housing Crisis
While there have been some notable gains in reducing delinquency rates on mortgages, that doesn’t mean that everywhere in the U.S. is out of the woods.
Despite dramatic improvements from the toughest periods of the recession, there are still a number of cities where the percentage of mortgages that are currently “underwater” — i.e. homeowners currently owe more on the loan than the house is worth on the open market — could indicate another housing crisis is looming for these burgs.
Student Loan Debt Is Especially High
Since the beginning of the Great Recession, student loan debt has soared. In the fourth quarter of 2007, Americans had $548 billion in student loan debt, according to the Federal Reserve. As of the second quarter of 2018, student loan debt had reached $1.4 trillion.
And, depending on where you live, that issue could be even more acute. States like New Hampshire, Pennsylvania and Rhode Island all have an average graduate leaving college owing over $35,000.
Interest Rates Are Rising
In response to the recession, the Federal Reserve lowered the federal funds rate — the benchmark interest rate — from 5.25 percent in September 2007 to a range of 0 percent to 0.25 percent in December 2008. It didn’t start raising its target rate until the end of 2015.
Since then, though, the Fed has been consistently boosting interest rates in the face of a booming economy, with seven increases since that point and two more anticipated in 2018.
The current target rate is 1.75 percent to 2 percent and should be higher by year’s end, an important consideration given that rising interest rates can have a big impact on finances.
The Stock Market Is Up (for Now)
The stock market tumbled during the recession. The Dow Jones Industrial Average was trading above 13,000 in December 2007 but dropped below 7,000 by March 2009. But it’s been rising since then and was at a record high of 26,616 on Jan. 26, 2018.
However, stocks swooned in early February and have spent most of the year struggling to get back to highs set earlier in the year. The S&P 500 only recently managed to edge past its high set earlier this year at the end of August, while the Dow still hasn’t reached the same level as February but did recently manage to edge back over 26,000 again just before the calendar turned over to September.
If you’re worried about an impending economic downturn, click to find out what people do in a recession.
More on the Economy
- These 13 States Are Still Suffering From the Recession
- Ways 9/11 Impacted the U.S. Economy
- 10 Effects of Inflation — and How to Protect Your Money Now
- Watch: Best and Worst States for the Middle Class
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Joel Anderson contributed to the reporting for this article.
Methodology: GOBankingRates surveyed economic factors during the Great Recession through today to determine how the conditions have changed over time, including unemployment, wage and labor force participation, sourced from the Bureau of Labor Statistics; charge-off and delinquency rates on loans and leases at commercial banks, sourced from the Federal Reserve; and median home values, sourced from Zillow.