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Expansions Don’t Die of Old Age

Many economists have become convinced that a recession in the United States is now overdue, if not immediately then surely before the 2020 presidential election. But US recessions since the end of World War II have generally resulted from three causes, none of which is currently present.

LONDON – The US economy has entered its 11th year of uninterrupted expansion, breaking the previous record for the longest period of growth in American history without a recession. But far from celebrating, many economists conclude from this unprecedented performance that a recession is now overdue, if not immediately then surely before the 2020 presidential election. Fortunately for the US economy, but sadly for President Donald Trump’s opponents, the idea that economic expansions have some kind of natural lifespan and then die of old age has neither empirical nor theoretical support.

History shows that US expansions since the end of World War II have varied in length from 12 months to 120 months, with no sign of mean reversion. Moreover, it can be argued that the 18-year period from 1982 to 2000 was really one continuous economic upswing, interrupted only briefly by the spike in oil prices caused by Iraq’s invasion of Kuwait.

And there are clearer instances of advanced economies that have avoided recessions for much longer than the ten-year record the United States has just surpassed. Australia is now in its 28th year without a recession, and the United Kingdom experienced 17 years of uninterrupted growth from 1992 to 2008. Unlike the US, both Australia and the UK are more recession-prone because of their dependence on commodities, finance, and property speculation.

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