Charting the Recent History of U.S. Economic Expansions

Charting the Recent History of U.S. Economic Expansions
author-image
Author:
PUBLISHED:

Charting the Recent History of U.S. Economic Expansions

DOWNLOAD CHART

The U.S. economy’s current expansion, now in its ninth year, is the third-longest since World War II. Age alone isn’t cause for worry – just look at Australia’s economy, which has been growing for a world-record 26 years.

So if, as the saying goes, expansions don’t die of old age, then what kills them? In the U.S., it’s usually a combination of significant imbalances in the economy and excessive monetary tightening. For example:

  • 1991–2001 expansion: dotcom bubble burst
  • 1961–1969: Fed tightening plus fiscal tightening in response to Vietnam-related budget deficits
  • 1982–1990: oil price shock following a real estate slump amid sluggish economy
  • 2001–2007: housing market crisis

The current expansion is aging gracefully. We see no major imbalances, thanks to temperate spending and investment by consumers and companies. And the Fed thus far has been taking a very careful, gradual and well-communicated path toward normalization.

However, labor market slack has largely eroded, meaning job growth and output growth are likely to slow. These trends could pressure inflation upward next year, potentially increasing the risk that the Fed raises its policy rate more than investors expect – and perhaps more than economic growth can tolerate.

We don’t expect a U.S. recession over the cyclical horizon, but we are carefully monitoring both the usual and unusual suspects in the inevitable death of the expansion.

For more charts critical to understanding markets, economics and policy, visit our Smart Charts library.

Access Now

SHARE THIS

PIMCO’s industry-renowned experts analyze the world’s risks and opportunities, from global economic trends to individual securities.

RECENT POSTS

By Month

Categories

Disclosures

This material contains the opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. PIMCO is a trademark of Allianz Asset Management of America L.P. in the United States and throughout the world. ©2017, PIMCO.