How The 'Real Economy' Has Fared During The Longest Bull Market In History

The S&P 500 bull market set a new record for the longest in history this week, reaching 3,453 days in duration. Since the bull market began, the S&P 500 has gained 323.3 percent and the economy has dramatically improved. Unfortunately, some key metrics for everyday Americans haven’t improved as much as share prices have in that stretch. Here’s an overview of how a range of economic numbers have changed during the bull market.

Income

Since the bull market began in March 2009, the S&P 500 has generated an average annual return of about 17 percent.

Annual wage growth since 2009 has ranged between about 1.5 percent and 4 percent, while inflation has generally ranged between 1 and 2 percent. Unfortunately for the average American, there’s been some convergence between those two numbers in recent months: the cost of living from July 2017 to July 2018 was up 2.9 percent, while wage growth in that same time was just 2.7 percent, the  Labor Department reported.

Those numbers imply that real wage growth — a measure of wage growth relative to inflation — is roughly zero at this time despite a booming economy and unemployment rates below 4 percent, the lowest levels in decades.

At the same time, U.S. gross domestic product grew by 4 percent in the second quarter, its highest growth rate in four years.

The pay gap between female and male earners narrowed during the bull market. The average female's full-time weekly wages grew by 17.1 percent from 2009 to 2017, while the average male's full-time weekly wages grew by about 14.8 percent in that same time, according to the Bureau of Labor Statistics. 

Perhaps the best measure of how the period since March 2009 has served the average American is real disposable income. Real, inflation-adjusted disposable personal income rose from about $38,000 in April 2009 to $43,600 as of May 2018, according to the St. Louis Fed.

In other words, while the S&P 500 has more than quadrupled in value since its March 2009 lows, the average American’s disposable income has increased just 14.7 percent in that time.

Economy

The employment rate is one metric that has made dramatic improvements throughout the bull market. U.S. unemployment stood at 8.7 percent in March 2009, but has steadily dropped to just 3.9 percent today. Unfortunately, the U-6 “underemployment” rate, which includes part-time workers who would prefer a full-time position, is much higher at 7.5 percent.

It’s been a great run for U.S. corporations. In addition to soaring stock prices, the U.S. corporate tax rate recently dropped from the 35-percent level to just 21 percent.

The top personal income tax rate for individuals was 35 percent in March 2009 but has since increased to 37 percent.

Quarterly seasonally adjusted business applications have increased from around 600,000 in 2009 to nearly 800,000 by the end of 2017, a roughly 33-percent increase, according to the U.S. Census Bureau.

Wealth

The average yield on a one-year certificate of deposit has fallen from 1.79 percent in January 2009 to just 0.72 percent today, according to Bankrate.

Much wealth has been generated throughout the bull market run, but a staggering proportion of that wealth has gone to the richest Americans.

The Urban Institute said that from 2007 to 2016, the median American family’s wealth decreased by 30.5 percent. In the same stretch, the top 1 percent of American families saw their wealth increase by 7.3 percent.

The bull market has disproportionately benefited white families. The average wealth of white U.S. families increased by about 14.5 percent from 2007 to 2016, according to the Urban Institute. In that same time, the average wealth of black families decreased 10.7 percent. The average wealth of Hispanic families decreased by 11 percent.

Education, Infrastructure

Students have been big losers in the bull market. Annual private college tuition rates have risen by 26 percent to $34,740 over the past decade, which public school rates are up 36.9 percent to $9,970.

The economy may be booming, but you wouldn’t know it by looking at the nation’s infrastructure.

The overall letter grade for the quality of the U.S. infrastructure, including airports, dams and bridges, was a D in 2009 and has improved to just a D+ as of 2017, according to the American Society of Civil Engineers. At the same time, the total estimated cost to fix the nation’s infrastructure has ballooned from $3.6 trillion to $4.59 trillion.

The Takeaway

The economy has improved by many metrics since the bull market began in 2009, with a tremendous surge in national wealth. But not all Americans have been in a position to take advantage of the tremendous growth, and the numbers above suggest there's still plenty of room for improvement in the real economy. 

Related Links:

The Longest Bull Run In History? Not Everybody Agrees

Analyst Says One Word Will Dominate Markets In The Second Half Of 2018: 'Recession'