What Six Years of Economic Recovery Looks Like

President Barack Obama will deliver his final State of the Union address to Congress on Tuesday night beginning at 9:00 p.m. ET. The president is likely to focus attention on the economic recovery of the last seven years, touting labor-market strength, a rebounding stock market, and an economic engine that, overall, has seen a steady pace of recovery since the worst financial crisis since the Great Depression.

Obama took his first oath of office on January 20, 2009. Here’s a look at progress that’s been made over the last seven years.

Labor Market Bounces Back

As the housing market collapsed in 2008, and the bottom fell out of the U.S. economy along with the stock market, millions of Americans found themselves out of a job as the labor market cratered, too. At its lowest point in February 2010, employment dropped by 8.8 million jobs from its pre-recession peak and the headline unemployment rate climbed to 10%, according to the Bureau of Labor Statistics.

Since Obama’s 2009 inauguration, though, 9.3 million jobs have been added to the economy, with 2.7 million of those jobs created in 2015. Meanwhile the unemployment rate has improved to 5%.

While the headline figures paint a picture of a robust labor market, wage gains and labor force participation are thorns in the jobs market’s side.

Mark Hamrick, senior economic analyst at Bankrate, said that essentially wage gains, or lack thereof, is the unfinished business of the Obama administration. In December, average hourly wages were unchanged from the month prior, a blemish on an otherwise solid jobs report. Still, wages are up about 2.5% from a year ago, the fastest year-over-year gain since July 2009. So there have been signs of improvement.

“There is still significant slack in the workforce: Look at the number of people working part time who want full-time jobs. Employers don’t seem to have much difficulty getting the workers they need,” Hamrick said.

According to the Bureau of Labor Statistics, just more than six million of the nation’s workers were employed part time for economic reasons in December. They are categorized as involuntary part-time workers. For context, that number has fallen by about two million since the president took office.

Hamrick cited the Federal Reserve’s anecdotal Beige Book report, which outlines business conditions in the central bank’s 12 districts across the country. It shows “sporadic instances” in which employers have bid up wages to attract workers. But the problem, Hamrick said, is that it’s not a market-wide scenario, so it doesn’t put upward pressure on wages for all workers. Perhaps exacerbating the problem, he said, is nearly all populations of workers have lost wage-growth ground except for the top 20% of earners.

“The president will properly note that he came into office right as the worst financial crisis in modern history was taking place, but the other part of that is Fed Chiefs Janet Yellen and Ben Bernanke have complained as loud as they can that the central bank has had to act alone to do anything to help the economy because you have a divided government.” Because of that, Hamrick doesn’t expect the president to outline policy initiatives in his State of the Union speech aimed at remedying low wage pressures and a labor force participation rate that’s hovering at 62.6%, the lowest level since the 1970s.

Wall Street’s Continued Recovery

Wall Street has staged a significant comeback from its financial-crisis lows. The S&P 500, the broadest U.S. market index, which reflects prices of 500 of the nation’s largest companies, dropped 56.8% from its peak on October 9, 2007 to its trough on March 9, 2009, according to data from the Federal Reserve Bank of Atlanta.

Since the president’s inauguration, the broad-market index is up about 147%

Tim Courtney, chief investment officer of Exencial Wealth Advisors, which oversees $1.4 billion in assets, said the markets have experienced a “typical” kind of recovery.

“There are only five periods in our history going back to the 1910s where we’ve had a roughly 50% decline from peak to trough like we did [during the crisis]. But the other times that happened, on average, it took about four years for our market to recover back to a previous peak, and we were very close to that in about four years in 2013 from the 2009 low,” he explained.

Courtney pointed out that while there have been some corrections of 10% or more, they have been relatively few. To that point, Hamrick said it’s the sudden and drastic downward movements in the market, like last summer’s 1,089 point decline on the Dow, that cause retail investors in particular to become concerned about the stock market’s health. Those so-called “flash crashes” are the subject of some controversy because it’s unknown how much of the market volatility is caused by high-speed computers executing trades absent of human reasoning and intelligence.

Hamrick said Obama’s appointment of Mary Jo White to chairwoman of the Securities and Exchange Commission (SEC) was aimed at helping keep a check on the market, and to help determine whether high-frequency trading could be subject to more regulatory oversight.

“She annunciated during the confirmation process that the SEC really needed to get its arms around what was happening with these crashes. But average Americans don’t feel like the regulators have their arms around it…and it feeds back into the credibility of the system and how people view the market as rigged,” Hamrick explained.

Banks and Regulations

Along the way to stabilizing the U.S. economy after the financial crisis were a slew of sweeping regulations and aggressive monetary policy aimed at preventing another meltdown from gripping the nation.

Courtney said what really helped the banks find more solid footing was the Troubled Asset Relief Program, known as TARP, which was implemented under George W. Bush’s administration and allowed the government to purchase assets and equity from financial institutions, injecting liquidity into frozen financial markets. The Fed did its part via three “rounds” of massive bond purchasing programs known as quantitative easing.

“The Fed has created a lot of money over the last couple of years and almost all of that cash ended up on the bank’s balance sheets…and has made the banking system healthier,” he said. “In that regard, maybe it’s mission accomplished in terms of making banks healthier and being able to weather future volatility."

On the flip side, Hamrick said there’s not a high degree of confidence the problem of “too big to fail” has been resolved and the large number of financial institutions has been reduced.

“The performance of the markets has demonstrated the global financial system is increasingly interconnected. That makes these potential issues even more complex because you could have a problem begin in the financial system in another part of the world and cause ripple effects in the U.S.,” he explained.

He pointed to the Fed’s decision in September to hold off on hiking short-term interest rates due to heightened concerns about China’s slowing economic growth and the worry it was spreading across the world.

To sum things up: the President can point to a number of economic policy successes under his administration, but there’s clearly still a lot of work to do, as he would surely admit.