Can the longest economic expansion in U.S. history last?

The US economy has officially entered the longest expansion in its history.

The country’s gross domestic product has grown for the past 121 consecutive months, the measure used to measure periods of sustained economic growth. This exceeds the 120-month expansion from 1991 to 2001.

The most recent expansion began in 2009, after the global financial crisis of 2008. The Great Recession was the worst American economic downturn since the Great Depression of the 1920s and 1930s.

President Donald Trump regularly take the credit for the strength of the economy under his watch, although the expansion began under President Barack Obama and has continued at a relatively steady pace since 2009.

Republican tax cuts and increased government spending last year have boosted the country’s gross domestic product. But those gains are now fading as spending slows, prices rise, and Americans prepare for the personal income tax expiration in 2025.

What did the extension look like?

The unemployment rate fell from a peak of 10 percent in October 2009 to 3.6 percent in May of this year.

Unlike past expansions, inflation has also stayed below the Federal Reserve’s 2% target for most of the past decade. Major stock indexes have also quadrupled since the Great Recession.

But the current economic expansion has been slower than previous periods of economic growth. The economy has grown at an average of 2.3 percent per year since 2009. In comparison, the economy has grown 3.6 percent per year during the 1990s.

The low growth rate has sparked discussions about whether a slowdown in economic growth could be the “new normal”.

A combination of unskilled workers and an aging population likely contributed to the decline in the growth rate. About 10,000 baby boomers retire every day, and employers have struggled to replace these workers.

Who benefited from it?

Economic expansion has greatly helped two groups of people. Those who were unemployed during the Great Recession and the richest Americans.

Twenty-one million jobs have been created since 2009, and many have gone to people who lost their jobs during the Great Recession.

At the other end of the economic spectrum, investors were able to borrow at extremely low interest rates and use the loans to build more wealth. Many people who already owned stocks before the recession were able to get the money back they lost in the recession and then some.

But people who had no investments were unable to take advantage of the low interest rates. And despite the long expansion, wages are just beginning substantial increase for the majority of the population in recent months.

Economists have wondered why. Some indicate that companies favor share buybacks instead of investing in workers. Others point out low worker productivity and employers’ attention to increase employee benefits rather than paying.

All of these factors combined have contributed to a widening of the wealth gap.

“Things are looking better overall,” said Bradley Hardy, American University labor economist. “People have jobs, and that job comes with benefits. “

But, Hardy said many Americans, even those in the middle class, still struggle financially.

A recent Federal Reserve investigation found that 39 percent of Americans still didn’t think they could afford an unexpected expense of $ 400. This is a significant improvement from 2013, when 50% of Americans said they couldn’t afford the expense, but it’s still high, especially for Americans who live in areas with high wages. did not follow. rising housing costs.

And after?

Economists like to say that expansions don’t die of old age. Australia, for example, has gone 27 years without a recession.

But some economists see cause for concern, and most expect at least a mild recession to occur next year.

“We will see a reasonably good economy for most of this year, but recent data is fragile,” said Dan North, chief economist at Euler Hermes North America.

Hiring has slowed and the yield curve has inverted, signaling investor fears for the near future. The yield curve, which measures the comparative rate of return on government bond investments, has long been seen as a predictor of recessions, and that could now mean that the Federal Reserve has already raised interest rates too much.

READ MORE: Why the inverted yield curve worries investors about a recession

When the Federal Reserve raises rates too quickly, access to liquidity at low interest rates dries up. This can dampen economic investment and foster a recession.

Trump was a fierce critic of the Federal Reserve’s decision to hike rates, breaking with previous presidents who refrained from interfering in the country’s monetary policy.

But Trump’s own policies also contribute to investor uncertainty. Trade between the United States and China rocked the stock market. The economy as a whole has been able to absorb the tariffs so far, but if the two countries fail to come to an agreement soon, American businesses and consumers will feel the pain.

If consumers and businesses are forced to cut spending because of the trade war, it could contribute to a recession.