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U.S. record breaking expansion

July 29, 2019

 

 

The month of July marks the 121st month of economic expansion in the US, making it the longest run on record since the previous 120 months from March 1991 to March 2001.

Not every month during this expansion has been smooth. Looking back to June 2009, the early months consisted of battling out of the worst recession since the Great Depression. Since then, expansion has been supported by the central bank buying massive amounts of assets and extremely low interest rates. As this expansion ages, it’s becoming difficult to manage and experts are on the fence whether the US economy can maintain this growth. Because of the US trade war with China and persistently low inflation, investors anticipate that this record-setting period of growth is coming to an end.

With high expectations of interest rates being cut by the Federal Reserve this month, experts believe this could preserve the streak. Still, others think that additional stimulus cannot withstand the threatening downturn or that the Fed won’t act aggressive enough to prevent it.

Furthermore, the US economy is also in its longest stretch of monthly job gains and the unemployment rate is at its lowest since 1969. Alongside with the stock market rising by 19 percent so far this year and the economy creating a whopping 224,000 new jobs in June, has left many hopeful that we will continue to see this slow but stable growth.

Keith Knutsson of Integrale Advisors commented that “Historical norms points to the end of this continuous expansion, but if the Federal Reserve can extend this cycle it may be time to rethink the rules for how large economies behave.”

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