It’s Official: This Is The Longest Economic Expansion On Record!

Prices are only up 18.5% over the now 10-year expansion. This has allowed the Fed to maintain an accommodative policy stance for…

from Zero Hedge

It’s official: as of this moment, the US economic expansion is now the longest on record, entering its 121st month since the end of the 2009 recession (which according to the NBER ended in June of that year), and surpassing the previous 120 month record – the March 1991 – March 2001 expansion – which ended with the bursting of the dot com bubble.

As Deutsche Bank’s Jim Reid writes, since US business cycles have been tracked from 1854 there have been 34 expansions. The last four have all been long relative to the past and are all in the top six in terms of duration. The other two in this top six were the June 1938-cycle which was boosted by the WWII rearmament efforts, and the Feb 1961-cycle where the Fed were late to deal with ever increasing US inflation, leading to too loose monetary policy and an extended cycle.

As part of a recent analysis, Deutsche Bank explains why this cycle – and the past four – have been so long relative to history, show various economic and market indicators from this cycle relative to the past to put the record-breaking expansion in some context, and predict what may happen next.

It may come as a surprise to exactly nobody, that there is a distinct correlation between the rising length of the US business cycle – and ensuing economic and market crashes which terminate said expansion – and the advent of the Federal Reserve. Oh, and globalization has a lot to do with everything too.

But first, a quick stroll down memory lane…

As Deutsche Bank writes, during the earliest monitored business cycles, the US economy was predominantly agriculturally based. Indeed the share of employment made up from this sector was 59% in 1850 and only dipped below 30% by 1920 and below 10% by 1960. This likely made GDP more volatile as the economy was more exposed to the boom and bust crop cycles without much sector diversity. In addition, prior to 1913 there was no central bank and banking runs and panics were a fairly regular feature of the economic landscape.