This archive report was first published on 1 November 2019.
As the U.S. economy continues to grow, a divergence between business and consumer spending has raised concerns about the sustainability of the current expansion.
According to Diane Swonk, chief economist for Grant Thornton, 'At some point in time, either the business sector has to come back or the consumer will falter.'
One reason for concern is the recent stall in hourly wage growth, which rose last year. Additionally, the length of the average workweek has fallen slightly, particularly in manufacturing, making it challenging for consumers to maintain their spending.
The Long View ¶
Since the 2009 recession, the unemployment rate has improved significantly, reaching a 50-year low. However, by many measures, the labor market is still not as strong as at the peak of past economic cycles.
As Oren Cass, a senior fellow at the Manhattan Institute, noted, 'The question is always, “compared to what?”' While celebrating the low unemployment rate and the long expansion, he also pointed out that the labor market looks weaker compared to previous cycles, such as 2006-2007 or 1999-2000.
Jerome H. Powell, the Fed chair, has stated that one reason for cutting interest rates is that the recovery is only now reaching people with criminal records, those with less education, or others who often face barriers to employment.
