For years, we have been watching a long and sometimes frustratingly slow recovery from the Great Recession. Last year, the unemployment rate dropped down to just 4.4 percent, the lowest it has been since May of 2001. While the unemployment rate is just one sign of overall economic health, this is certainly encouraging news. Yet, we still have work to do.
What does low unemployment mean? On the surface, low unemployment means that most Americans who want to work, and are able to work, are employed.
The last time our unemployment rate was this low (back in 2001), we were emerging from the dot-com boom. The nation’s economy had been growing by more than 4 percent annually, and the federal budget ran a surplus.
While we’re happy with the current progress, we aren’t exactly doing as well as we were in 2001. What’s the difference? While it is true that employers have added 16.3 million jobs since 2010, a large number of those jobs are in lower-paying industries like leisure and hospitality. Blue-collar workers have historically relied upon manufacturing jobs to provide a living wage to those without college degrees, and many of those jobs left the country during the recession.
So, yes, unemployment is low, but many workers aren’t quite earning the salaries they once were.
However, many new jobs remain unfilled. Greater competition on the employer’s side of the job market will hopefully trigger rising wages and better benefits packages. And of course, we have yet to witness the full consequences of the recent tax reform bill, which slashed corporate tax rates with the intention of helping companies reinvest their profits in infrastructure and new jobs.
With lower wages and high healthcare costs discouraging consumer spending, our growth isn’t yet as healthy as we would like to see. 2018 might prove to be a pivotal year in economic recovery, and we will endeavor to keep you informed of positive signs yet to come.
In the meantime, stay in touch with us. Regular meetings will help you stay on top of your own financial future, regardless of which way broader economic winds might blow.