03-03-2017, 10:09 AM
(03-02-2017, 05:02 PM)TeacherinExile Wrote:The Wall Street Journal pointed out the aging nature of this economic expansion, too:(03-02-2017, 04:47 PM)David Horn Wrote: We're in, if not an unprecedented period, a period of unusual dynamics. Inflation is extremely low, growth is good though not spectacular, and the job market is finally tightening. The economy has had the longest period without a recession or even a mild downturn in decades. Under conditions like these, the smart money tends to see the future as one of two things, a bubble waiting to burst or a recession in the offing. Yet the smart money is betting big. Of course, the smart money bet big under GWB too.
Color me dubious. If the bull market continues another year, I'll be shocked. If it continues another 60 days without a large correction, I might be a bit scared.
I, too, am dubious. Both the economic expansion and the bull market are getting "long in the tooth." Trump's herculean task is to "keep the ball rolling," which he may well succeed in doing--at least in the short run. Here's what he's up against in terms of timing:
"Current U.S. Economic Recovery May End Up as Longest Ever" [And note that this was written last July.]
http://www.marketwatch.com/story/current...2016-07-18
"Trump Rally Could Mark Biggest Postelection Stock Market Rise Since Hoover" [And, as of yesterday, the Dow is up a stunning 15% since the election..."animal spirits" have apparently been released in the equity markets after a two-year trading range.]
http://www.marketwatch.com/story/trump-r...2016-12-12
The comparison to Hoover is a bit discomforting, to be sure.
"This Is Now the Third-Longest Economic Expansion in U.S. History" (Only the expansions of the 1990s and 1960s were longer. Here's what that might mean.)
http://blogs.wsj.com/economics/2017/03/0...s-history/
A few excerpts from the article:
The road back from the recession that struck in 2007 has been messy: sluggish growth, slumping productivity, stubbornly high measures of unemployment. But there’s an aspect of this recovery that may be redemptive: It’s been unusually long.
The arrival of March means the current economic expansion has now entered its 93rd month, surpassing the 92-month expansion of the 1980s, to become the third-longest in U.S. history.
The financial crisis was such a severe earthquake [my favorite metaphor] that crippling aftershocks seemed inevitable. No such rumble has occurred. Is it because low growth lasts longer? Or is it a sign that something more fundamental changed about the U.S. economy in recent decades?
...The stock market usually turns before the economy and has been in a similarly enduring bull market since March 2009...
...If this economy makes it to next summer, it will be the second-longest in U.S. history. By mid-2019 it would become the longest on record. The bull market in stocks is already the second longest in history.
Is the expansion’s length redemptive? It’s certainly better than having a renewed collapse. But this was an unusually severe recession (the longest since the Great Depression, and by many measures the most severe since then too) and slow recovery left many people in dire straits for far too long, leading to significant economic scarring. Some economists believe that one reason for this expansion’s length may well be this weakness. Booming economies build up excesses; it’s hard for a tepid economy to reach the point where there’s as much to lose...
...Over time, however, recessions have become less frequent and thus expansions longer. This could be explained, in part, by the shift away from an industrial economy...
...Prior to the recession of 2007-09, economists referred to the phenomenon of lengthening expansions and mild recessions as “the Great Moderation.” The idea of “moderation,” however, was widely mocked after the severity of the financial crisis. There’s nothing moderate about a national banking system collapsing, a housing bubble bursting, millions of homes in foreclosure and millions of workers being thrown into unemployment.
It’s clear now that recessions still happen and can be incredibly severe. Yet even if a new severe crisis hits soon, it will still bookend a very long expansion. The longer it grinds on into the record books, the clearer it becomes that some qualities of the “Great Moderation” have survived.