Unemployment rate matches lowest rate since 1969

The Labor Department reported Friday that unemployment fell to 3.8% in May. The economy added 223,000 jobs, better than expected. CNN's Christine Romans has details.

Posted: Jun 2, 2018 10:24 AM
Updated: Jun 2, 2018 10:24 AM

The slow but steady recovery from the Great Recession just hit a milestone: It's tied for the second-longest economic expansion in American history.

The recession ended in June 2009, which means the recovery is 106 months old through April of this year. That matches the expansion from 1961 to 1969, an era of big government spending under President John F. Kennedy and then President Lyndon Johnson's Great Society.

Unlike the breathtaking growth of the 1960s, the current expansion won't set any records for speed. It took far longer than many hoped for unemployment to get back to healthy levels. Wages have only recently begun to accelerate meaningfully.

Yet the very fact that the economy didn't roar back to life from the financial crisis extended the life of the recovery. The slow speed prevented it from overheating.

"The silver lining is this very long economic expansion," said Moody's Analytics chief economist Mark Zandi. "We didn't experience the same boom-to-bust cycle that we had in the past."

Low and slow

Scarred by the 2008 meltdown, businesses and individuals were reluctant to take on risks during the early years of the recovery. Many were still working off the debt from the last boom.

"Everyone ran for the proverbial economic bunker, and it was hard to coax them back out," Zandi said. "People were shell-shocked."

The absence of explosive growth and problematic inflation meant the Federal Reserve didn't have to step in with aggressive rate hikes aimed at cooling the economy down. Low rates and steady growth allowed the stock market to quadruple from its March 2009 low.

Related: 58% of investors say 2018 is the peak for stocks

Economists don't see a recession on the near horizon, meaning the recovery has a real shot at staying alive until July 2019, when it would surpass the 1991-2001 boom as the longest on record. That expansion lasted exactly 10 years and was powered by the rise of the internet.

"Absent a shock like a trade war, we're likely to become the longest expansion," said PNC chief economist Gus Faucher.

He noted that because growth has been mediocre, few of the boom-time excesses have built up in housing markets, corporate balance sheets or household credit card statements.

"This is an economy that has been growing steadily at an OK, not fantastic pace. Things are well balanced," Faucher said.

Just 13% of global fund managers polled by Bank of America Merrill Lynch in early April think a recession is likely in the near term.

Unemployment has steadily dropped to 4.1%, the lowest since 2000. That's down dramatically from a peak of 10% in 2009. Economists predict it could keep dropping, perhaps into the mid-3% range. That hasn't happened since 1969.

Distant threat

One reason growth is predicted to continue for now: Washington is borrowing heavily to spend more and tax less.

Republicans passed tax cuts for businesses and individuals late last year. Then lawmakers reached a bipartisan agreement this year to ramp up spending. That recipe, normally reserved for downturns, typically stimulates growth.

All that deficit-financed aid from Washington is juicing growth now, but it may also speed the demise of the recovery.

"It's laying the foundation for the next recession," Zandi said.

He predicted that the tax cuts and government spending will accelerate growth, increase inflation and eventually force the Fed to slam the brakes on the economy.

"By mid-2020, we will be most vulnerable to the next recession," Zandi said, pointing to the fading impact of government spending and tax cuts.

Related: My road back from the Great Recession

Hedge fund billionaire Ray Dalio recently estimated there's a 70% chance of a recession before the November 2020 presidential election.

Even if a recession isn't imminent, Wall Street is starting to think about the end of the business cycle.

Fifty-eight percent of the money managers polled by Bank of America think the stock market has already peaked or will later this year.

Morgan Stanley chief US equity strategist Michael Wilson warned in a report on Sunday that "2018 will mark an important cyclical top" for US and global stocks, led by a "deterioration" in the credit markets.

Like other economists, Zandi questioned the timing of the tax law and spending hikes given the health of the economy.

"It's almost like you read the economic textbook and did the opposite of what it said to do," Zandi said. "It's a real experiment — and in my view, it won't end up well."

Minnesota Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 97638

Reported Deaths: 2067
CountyConfirmedDeaths
Hennepin27372932
Ramsey11088322
Dakota7635126
Anoka6238137
Stearns407724
Washington388355
Scott262533
Olmsted251928
Nobles197716
Blue Earth17266
Wright16957
St. Louis165941
Carver14377
Clay141741
Rice13438
Mower13425
Sherburne116914
Kandiyohi10552
Winona91318
Lyon7224
Waseca6898
Benton5603
Crow Wing55518
Steele5552
Freeborn5464
Nicollet54517
Watonwan5304
Chisago5131
Todd5042
McLeod5012
Le Sueur4744
Otter Tail4624
Beltrami4505
Martin43010
Goodhue3829
Itasca34715
Pine3430
Douglas3372
Polk3224
Isanti3151
Becker2812
Carlton2761
Morrison2682
Dodge2570
Pipestone23210
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Chippewa2231
Meeker2132
Wabasha2020
Sibley1993
Brown1962
Yellow Medicine1902
Cass1844
Redwood1773
Rock1760
Murray1722
Mille Lacs1693
Renville1578
Unassigned15452
Jackson1491
Faribault1470
Swift1441
Fillmore1330
Houston1280
Kanabec1278
Roseau1250
Koochiching1233
Pennington1201
Hubbard1171
Lincoln1160
Stevens1041
Pope990
Aitkin831
Big Stone830
Wadena720
Wilkin703
Lac qui Parle651
Grant634
Lake600
Norman540
Marshall531
Mahnomen491
Red Lake451
Traverse340
Clearwater280
Lake of the Woods231
Kittson120
Cook60

Iowa Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 86860

Reported Deaths: 1315
CountyConfirmedDeaths
Polk16010262
Woodbury555467
Johnson517027
Black Hawk450990
Linn4101113
Story346217
Dubuque333241
Scott304528
Dallas280738
Pottawattamie215939
Buena Vista199912
Marshall179134
Sioux16803
Wapello134057
Webster128014
Plymouth116121
Clinton113021
Muscatine112155
Crawford11005
Cerro Gordo105921
Warren9666
Jasper86432
Des Moines8008
Marion7697
Henry7554
Tama73932
Carroll6855
Lee6437
Wright5961
Dickinson5306
Boone5178
Bremer5027
Washington47211
Louisa43115
Delaware4233
Mahaska41519
Floyd3543
Jackson3523
Franklin35118
Lyon3514
Winneshiek3406
Clay3344
Hamilton3323
Benton3281
Winnebago31713
Hardin3071
Poweshiek3078
Buchanan2861
Jones2843
Kossuth2800
Butler2752
Emmet27010
Clarke2683
Shelby2681
Allamakee2666
Chickasaw2661
Sac2650
Clayton2633
Cherokee2552
Cedar2521
Guthrie2527
Harrison2523
Fayette2312
Madison2272
Grundy2243
Iowa2161
Palo Alto2050
Hancock1952
Howard1927
Humboldt1913
Mitchell1910
Calhoun1873
Mills1831
Page1710
Cass1692
Osceola1690
Pocahontas1652
Monona1601
Monroe16011
Lucas1566
Appanoose1423
Jefferson1391
Union1383
Taylor1321
Davis1274
Ida1261
Fremont1210
Van Buren1151
Keokuk1141
Worth1090
Greene1030
Montgomery975
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Wayne872
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Adams330
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