A robust economic recovery has benefited all household groups
It’s election season. This is a time when the query arises as as to whether individuals are materially higher off than they’re were 4 years ago come up. Comparing March 2024 to March 2020, when a once-in-a-century pandemic broke out, the reply is clearly a powerful yes. But even the winter of 2024 in comparison with the months before the pandemic reveals a stronger and more stable economy that’s providing American families with higher material well-being today than they did then.
Job stability is more pronounced than before the pandemic
The labor market recovered in a short time because of major changes fiscal policy interventionsA Center for American Progress Report explains. Unemployment fell sharply as recent jobs were created again. The unemployment rate averaged 3.6% within the three months before the outbreak of the pandemic in March 2020, barely below the three.8% of the last three months – from December 2023 to February 2024. In addition, the common duration of unemployment was before the pandemic it was 21.1 weeks and is now at 21.3 weeks. Based on these overall numbers, the job market looks just as strong now because it did before the pandemic.
Other indicators suggest that staff at the moment are in a more favorable labor market than immediately before the pandemic. For example, data from the Bureau of Labor Statistics shows that the job emptiness rate as a percentage of the variety of employees was 5.3% over the past three months, in comparison with 4.3% from December 2019 to February 2020. The job emptiness rate Jobs at the moment are still greater than 20% higher than before the pandemic, giving staff more opportunities for economic mobility. At the identical time, in accordance with BLS data, the layoff rate was 1% within the last three months, greater than 20% lower than within the winter of 2020. Workers’ job security is less in danger today than it was 4 years ago.
The current job stability has now been followed by an extended period of labor market calm than before the pandemic. Through February 2024, the unemployment rate had been below 4% for 25 consecutive months, the longest such period in greater than 50 years. By comparison, the unemployment rate was below 4% for 13 months before the pandemic hit the labor market in March 2020.
Employees are concerned not only with finding a job, but in addition with keeping it or finding a brand new one in the event that they are laid off. The current job market is in every respect more stable than before the pandemic.
More staff will receive significant wage increases
Widespread job stability has led to widely shared wage gains. Average hourly wages in February 2024 were about 1% higher than 4 years ago, in accordance with BLS data. But these averages include staff who’ve been on the job market for a very long time and those that are newly hired. The changing workforce mix can provide misleading indications of wage growth.
Follow the identical staff over time Seeing their wages increase is a greater measure of individuals’s economic security, a metric tracked by the Atlanta Fed. My Center for American Progress colleague Brendan Duke, Reports that a bigger share of staff received annual wage increases above inflation at the tip of 2023 than at the tip of 2019. And a bigger share of staff received inflation-adjusted wage increases above 5% in 2023 than did in 2019. These wage increases were particularly pronounced amongst younger staff – those that were between 25 and 34 years old in 2019 and between 29 and 38 years old in 2023. Continued labor market stability lately has meant that more staff at the moment are seeing wage increases above the inflation rate than 4 years ago.
Household wealth far exceeds income
Quarterly Federal Reserve data show that total household wealth – the difference between what people own and what they owe – was $156 trillion at the tip of 2023, or 7.5 times the common household income after taxes. At the tip of 2019, this ratio was 7.1.
additional data Fed research shows that wealth gains have been particularly pronounced amongst younger households and millennials. For example, the common wealth of Millennial households grew 107.3% from December 2019 to September 2023, probably the most recent quarter for which data is on the market. In comparison, the common wealth of generational households increased. On average, households today were higher prepared for possible economic hardship, for economic advancement and for a secure retirement than 4 years ago.
Home ownership has increased
The increase in home ownership is a central consider the expansion of average wealth. Slightly larger proportions of households have gained access to the wealth creation related to home ownership. The U.S. homeownership rate was 65.7% at the tip of 2023, in comparison with 65% at the tip of 2019 US Census Bureau. The increases in homeownership were particularly pronounced amongst households made up of individuals aged 35 to 44, increasing from 60.4% to 62% over the four-year period. This was the most important increase in home ownership across all age groups.
Additionally, the homeownership rate of households with incomes below the median income increased from 51.4% at the tip of 2019 to 53% at the tip of 2023. In comparison, the homeownership rate of households with incomes above the median decreased by 0.1 percentage points over the identical period. The increases in home ownership were particularly pronounced amongst younger and lower-income households, suggesting a reasonably balanced economic recovery.
Households face lower debt burdens
Debt has grow to be a mainstay of American households’ financial lives, but debt burdens have declined lately. The total amount of outstanding loans, comparable to mortgages, bank card debt, student loan debt and auto loans, averaged 96.2% of after-tax income in December 2023, in accordance with the Fed. In comparison, this ratio was 97.5% at the tip of 2019. Mortgages fell from 64% to 63.6% of average tax income, bank card debt fell from 6.7% to six.3% of after-tax income, and other debt – primarily student and auto debt – fell from 18.9 within the last 4 years % fell to 18.1% of after-tax income. Private households progressively reduced their debts and thus relieved themselves of the high level of indebtedness.
The decline in debt also partially offset higher interest payments. The Federal Reserve reported that the debt service ratio – average debt payments as a percentage of after-tax income – stood at 9.8% at the tip of 2023, barely below the ten% at the tip of 2019. Households essentially saw strong income gains amid a really rapid economic recovery and a robust and stable labor market , which has allowed them to scale back their debt burden during the last 4 years.
