The Recovery from the Great Recession: A Long, Evolving Expansion

Prior to 2020, the Great Recession was the most important macroeconomic shock to the United States’ economy in generations. Millions lost jobs and homes. At its peak, one in ten workers who wanted a job could not find one. On an annual basis, the economy contracted by more than it had since the Great Depression. A slow and steady recovery followed the Great Recession’s official end in summer 2009, but because it was slow and the depth of the recession so deep, it took years to reduce slack in labor markets. But because the recovery lasted so long, many pre-recession peaks were exceeded, and eventually real wage growth accumulated for workers across the distribution. In fact, the business cycle (including recession and recovery) beginning in December 2007 was one of the better periods of real wage growth in many decades, with the bulk of that coming in the last years of the recovery.