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The economic expansion just hit a record for the longest ever

The U.S. economy hits a record
U.S. economy hits record recessionless streak 01:41
  • One unusual aspect about what's now America's longest period of expansion -- 121 months in July -- is how slow its pace has been.
  • That's at least partly the result of how deep the Great Recession was and how much wealth and employment it destroyed.
  • Another notable point is how uneven this expansion has been, in terms of who has benefited most and what areas of America those benefits have gone to.

As July starts, the current U.S. economic expansion is crossing an invisible line: At 121 months, it's officially the longest period of growth in U.S. history. From here on out, we're in uncharted territory. 

One of the things that has made the current expansion the longest on record is its slow, gradual nature. Average annual GDP growth -- a broad measure of a country's entire economic output -- has been lower in this expansion than in the previous three.

One reason for that is the sheer number of people who lost work in the Great Recession meant employment took far longer to come down than it took in a typical recovery. And the jobs that this expansion created aren't the same as the ones the recession destroyed. Today, nearly 5 million more people are working in the lower-paid retail and hospitality sectors than 10 years ago, while manufacturing and construction sectors added just over 1 million jobs apiece.

This recovery has also been uneven. The recession was indiscriminate in taking out wealth across the country, but that wealth hasn't grown back at the same rate. Instead, a few households at the top have seen spectacular growth in their assets.

"The wealth gains over this expansion have not been distributed evenly. Indeed, looking at median family net worth over the last 30 years, we see that the typical American family is poorer than pre-crisis," Deutsche Bank analysts wrote in a note recently. "Real median household net worth fell sharply in the recession, to early-1990s levels, and has not recovered since."

A narrowing of growth

The geography of growth mirrors that unevenness. For a handful of superstar cities -- New York, Los Angeles, Dallas and Miami -- growth has been spectacular, while small towns and rural areas are just about where they were prior to the crash. 

"You're seeing a narrowing of economic growth," John Lettieri, CEO of the Economic Innovation Group, told CBS MoneyWatch previously. "Where the jobs and businesses have come back doesn't map very closely with where they were lost."

EIG, a think tank focused on entrepreneurship, has been sounding the alarm about what it considers a troubling geographic disparity. Between 2007 and 2016, its research shows, 90% of the 3.7 million jobs created in America went to the richest 20% of ZIP codes.

Between 2007 and 2016, the entire country added about 53,000 net new businesses, according to Census Bureau data. But just five counties together added even more during that time period -- about 55,000 businesses. The winners: New York's Brooklyn and Queens; Los Angeles; Florida's Miami-Dade; and Harris County, Texas, which contains Houston.

"Something kills an expansion"

As a recovery extends itself, it's normal for economic growth to gradually slow as more and more people get work and jobs get harder to fill. Last month's hiring figures -- while unusually dismal -- offer a preview of this trend. Already this year, businesses have hired an average of 164,000 people a month, down sharply from last year's 223,000. 

"Expansions don't grow old and die. Something kills an expansion," Robert Frick, chief economist at the Navy Federal Credit Union, told CBS MoneyWatch recently.

That killer could very well be the U.S. trade wars. While President Donald Trump reached an agreement to restart talks with his top trade rival, China, at this week's G20 summit, Mexico and now India remain potential sore spots. The Federal Reserve has essentially promised to drop interest rates if the tariffs imposed so far have a noticeable impact on growth. But with rates already historically low, that many not be enough. The Fed's current target rate, between 2.25% and 2.5%, is the lowest it has been at the peak of an economic expansion.

That might explain why more than two-thirds of corporate finance leaders see an economic downturn before the end of next year. Said John Graham, finance professor at Duke University: "For the first time in a decade, no region of the world appears to be on solid enough economic footing to be the engine that pulls the global economy upward."

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