Length Of Economic Expansions

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  • As we hit mid-year 2018, the current economic expansion that began in June 2009 turns 9 years old.
  • The current cycle is now the second longest in U.S. history.
  • This article gives a historical examination of economic expansions to help readers frame their own view of the length of this current business cycle.

Given the severity of stock market corrections that can occur at the end of the business cycle, it is natural for investors to probe where we are in the current economic expansion. Mark Twain once said: "History doesn't repeat itself, but it often rhymes." Analyzing past business cycles can help us understand the uniqueness of this elongated expansion.

The graph below shows the lengths of the 14 periods of economic expansion since the Great Depression. At the left, I have listed the event that predated the expansion. For example, the National Bureau of Economic Research dated the trough of the Great Recession as June 2009, and the economy has not re-entered recession, marked as a decline in economic activity lasting more than two quarters, in 108 months and counting.

The current expansion of 108 months is now the second longest in the sample period. While I show only the post-Depression expansions in this article, this is also the second longest expansion in data from the National Bureau of Economic Research dating back to the 1850s, a time span pre-dating the Civil War.

The current expansion still trails the 1990s bull market by 12 months, a streak that would be reached one year from now in July 2019. The average length of expansion of the previous 13 episodes is just 59 months. A look at the two other expansions of similar length may be instructive to Seeking Alpha readers.

1960s Expansion

By the end of a lengthy expansion into the late 1960s, inflation was ebbing higher as a result of increased federal deficits. A relatively mild recession began in late 1969, driven by fiscal tightening aimed at attempting to close the budget deficits driven by the Vietnam War. Through the mid-1960s, NASA had been receiving more than 4% of the federal budget as part of the great

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Ploutos profile picture
Institutional investment manager authoring on a variety of topics that pique my interest, and could further discourse in this online community. I hold an MBA from the University of Chicago, and have earned the CFA designation. My articles may contain statements and projections that are forward-looking in nature, and therefore inherently subject to numerous risks, uncertainties and assumptions. While my articles focus on generating long-term risk-adjusted returns, investment decisions necessarily involve the risk of loss of principal. Individual investor circumstances vary significantly, and information gleaned from my articles should be applied to your own unique investment situation, objectives, risk tolerance, and investment horizon.

Disclosure: I am/we are long SPY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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