US recovery hits 5-year mark, but long way to go

June 1, 2014: 3:14 PM ET
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Five years after the Great Recession ended, these CNNMoney readers still don't feel recovered. Click on the image to read their stories.
NEW YORK (CNNMoney)

It's June 2014, and that means it's been five years since the Great Recession officially ended. If you're not ready to celebrate this milestone, you're certainly not alone.

The majority of Americans still rate economic conditions as "poor" and for good reason: This jobs recovery is the slowest on record, wages are barely rising, home prices are still below their peak and more Americans are using food stamps than ever before.

Main Street America still doesn't feel recovered, because, quite frankly, it's not.

So how much longer will the healing process take? Economists surveyed by CNNMoney expect a full recovery is still two to three years away.

"The labor market is the scar on the economy that remains from the Great Recession, the financial and housing crises. It may be fading, but it is still clearly visible and will remain for years to come," said Sean Snaith, economics professor at the University of Central Florida.

Interactive: Why you don't feel recovered

Here's how far we've come: Technically, the Great Recession ended in June 2009. That determination was made by the National Bureau of Economic Research, an independent group of economists that has officially called the beginning and end of business cycles since the 1920s.

Why pick that date? Essentially, that's when the bleeding stopped and the slow healing process began. After that point, economic activity started picking up. Auto sales started rising, and the manufacturing sector slowdown ended. Home prices hit their bottom and finally started rising again, and the stock market came back to life.

Now, five years later, U.S. economic activity and the stock market are at all-time highs. States like North Dakota and Texas are benefiting from energy-related booms. Jobs in health care keep growing, and professional office positions are back. There are also more low-wage jobs at restaurants and bars.

But the recovery was far from a quick bounce-back. It's been more like a long, slow slog, and here's the key missing component: The broader job market.

Related: What rebound? 'I got left behind'

How we aren't fully recovered yet: Overall, the economy lost 8.7 million jobs in the recession, about half of which were in blue-collar industries like construction and manufacturing. As the housing market crashed, Sun Belt states like Nevada, Florida and Arizona suffered the deepest job losses, and to this day, the labor markets in these states are below their pre-recession peaks.

The recovery is happening, but it's too slow for many Americans. The economy has still not recouped all the jobs lost in the crisis, let alone created enough new ones to keep up with a growing population. As of April, about 3.5 million people had been unemployed for six months or more. (That's more people than Chicago's population.)

One of the clearest signs of a business rebound is the booming stock market, but only about half of Americans own stocks, either directly or through a retirement account, and for many, the amount is small. It's really the richest households that have benefited from the five-year bull market.

Households earning $394,000 or more in 2012 (the wealthiest 1%) captured about 95% of the income gains in the first three years of the recovery, according to economists at the forefront of income inequality research, Thomas Piketty and Emmanuel Saez. Meanwhile, incomes for the lower 99% were practically flat.

Home prices haven't entirely come back: For the middle class, the bulk of wealth is still tied up in the value of American homes, and home prices are not back to their peak.

"It is not surprising that many people feel the economy is not in good shape," said James Smith, chief economist for Parsec Financial. "Their incomes are less than in 2007 or the value of their house is much less than then."

Related: Have hope! Finally, I got a job!

Each American -- including children -- is about $4,700 a year worse off than they would have been if the economy had not gone into recession, calculates Lawrence Yun, chief economist for the National Association of Realtors. Of course, some are better and some are worse off than that, but that's the average loss.

"We still have a large gap," Yun said. "After a recession, generally in order to make up for the downfall, the economy should be rising 4% to 5% per year." Instead, the economy has been growing closer to 2% a year.

The outlook is optimistic for 2014, with many economists predicting the U.S. economy will grow more than 3% this year. That said, even at this rate, a full recovery will take several more years.

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