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Economic Cycles: Is the Expansion Over?

Last Friday we talked about economic cycles and I mentioned that there are indications that the current expansion is not yet over. Let's go into a bit more detail.

 

Bull markets don't die of old age. You've probably heard that adage, but what does it mean? That saying implies that the absolute age, the number of consecutive quarters or years of expansion, has nothing to do with predicting or causing the end of the current expansion.

 

It's very tempting to look back at previous economic cycles, measure the average length, and extrapolate a similar end to the current cycle. In fact let's briefly walk down that path. In the post-World War II era, the average length of the growth phase of the business cycle (the period between recessions) has been 22 quarters. That's very close to the age of the current expansion.

 

To add a little perspective, the longest expansion began in 1991 and lasted ... Log in or subscribe to continue reading.


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