The U.S. economy is experiencing its longest period of uninterrupted expansion since at least 1854, breaking through hurdles such as the eurozone crisis, turmoil in the developing world, and now trade wars to overtake the economic boom of the 1990s – at least in terms of duration.
Recessions are generally defined as two consecutive quarters of declining gross domestic product, but the National Bureau of Economic Research – the semi-official arbiter of booms and recessions in the United States – uses a broader and more qualitative definition, and estimates that the current expansion began in June 2009.
This means that this month the U.S. expansion reached its 121st month, making it longer than the golden age of the economy from March 1991 to March 2001, and more than twice as long as the average post-war expansion.
“This cycle is now longer than the Beatles were together. It has persisted for a longer period of time than the original Seinfeld broadcast on network television. It’s older than Instagram,” Brian observed. Levitt, strategist at Invesco.
Assessing recessions is tricky, even when you’re in the middle of a recession, so it’s at least theoretically possible that the US economy is already in trouble. The NBER did not say the United States was in a recession until December 2008, a year after deciding the economy had started to contract, and did not announce that it had officially finished from June 2009 to September 2010.
This year, the US economy grew at an annualized rate of 3.2% in the first quarter and continues to grow by around 1.5%, according to the Atlanta Fed’s ânowcastingâ model, making likely that the record was in fact broken.
Yet this new record comes at a time when some economists and investors fear the next slowdown is looming. Global economic data has been mixed and a recent truce between the United States and China on trade has done little to allay fears that the end of the post-crisis recovery is near.
Stock markets rallied after the weekend’s G20 summit, but bond markets were relatively untouched by the attempt to de-escalate trade tensions. Interest rate futures indicate traders believe the Fed is going to have to cut interest rates aggressively over the next 12 months to ensure growth stays on track, but some investors believe the expansion will likely end soon.
âAs the uncertainty surrounding trade policy remains unresolved, the impact on growth prospects is increasingly pronounced,â said Chetan Ahya, chief economist at Morgan Stanley. “Business confidence and [corporate investments] slowed to multi-year lows. We expect global growth to slow even further, and any sustained escalation from here increases the risk of a recession. “
The recovery from the financial crisis has also been weaker than most other economic setbacks since World War II. US GDP is now around 20% above its pre-crisis peak. In contrast, the boom of the 1990s increased the size of the US economy by 41%, according to RBC Capital Markets.