REUTERS / Jonathan Alcorn
- The United States’ economic expansion, at 121 months and more, became the longest on July 1.
- The record expansion was also one of the slowest, with employment and GDP growth lagging behind other post-war recoveries.
- Now economists are watching the length of the expansion. Economic data has given mixed signals and trade disputes have weakened the global economy, potentially causing a slowdown in the United States.
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The economic expansion of the United States and the recovery from the Great Recession officially made history on Monday, July 1: The 10-year, 121-month expansion that began in June 2009 is now the longest on record.
The previous record was set during the 120-month expansion from March 1991 to March 2001, according to the National Bureau of Economic Research. It ended when the dot-com bubble burst.
While the current expansion is a record, it has also been one of the slowest. Gross domestic product has grown 25% year-to-date since the start of the expansion, which is lower than other recorded booms. The the unemployment rate is 3.6%, its lowest point since 1969. It is down from a high of 10% in October 2009, but employment growth has taken much longer during this recovery than during other post-recovery recoveries. war.
Now all eyes are on the clock to see how long the current expansion can continue.
The US economy and markets have given mixed signals about the likelihood of a recession on the horizon. On the one hand, the The S&P 500 has reached new heights. On the other hand, trade tensions triggered a panic in the bond market, pushing the 10-year Treasury yield below 2%. As investors bought more long-term Treasuries, they narrowed the gap between long-term and short-term yields. This triggered an inversion of the yield curve, long seen as a sign that a recession was coming.
Trade tensions have also rocked the global economy and contributed to signs of slowing outside the United States. While there was a sigh of relief on Monday after President Donald Trump and Chinese President Xi Jinping agreed to a trade truce, it was short-lived; The United States threatened to raise tariffs against Europe on Tuesday in the context of a dispute over aeronautical subsidies, bring down actions to the news.
The The Federal Reserve has indicated it is open to lower interest rates in July to support the US economy and continue to expand. Bonds and stocks rallied on the prospect of lower rates, and many analysts expect the Fed to reduce through between 25 bps and 50 bps this year.
Some fear, however, that the damage has been done and that the Fed will not cut rates quickly enough to revive the economy, or that the stimulus will not be enough to avoid a slowdown. One important piece of data – the June jobs report – will be released on Friday and shed light on the state of the US economy. Analysts expect around 1,580,000 non-farm jobs to have been created in June, far more than the disappointing figure of 75,000 jobs in May.