The US economy is in its 69th month of expansion, making it the 6th longest period of economic growth since the 18050s.
Gluskin Sheff’s David Rosenberg argues that expansions don’t die of old age. And according to the indicators he follows, this growth phase isn’t over yet.
“Looking at all the indicators on capacity, monetary policy, and inflation today versus the exact same phase of the other modern-day long cycles of the 1990s and 2000s, this current one still has a lot of legs.”
Here’s a bit more from Rosenberg:
The problems with the economy and the stock market don’t start with the first rate hike, but rather the last one — it is that last one that inverts the yield curve that bites and by then it is too late.
The stock market typically rolls over in less than a year and the economy shifts to recession three to four months after that — but dating the process from the first rate hike to the start of the recession is three years, on average.
So even if the Fed were to begin tightening as early as September, the historical record would suggest that the next downturn would not start until the third quarter of 2018 and the stock market won’t begin to price in until late the spring of that year at the earliest.
And according to Rosenberg, the expansion would have lasted 109 months.
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