The U.S. economic expansion has entered its seventh year. Given the fact that the lengthiest recovery in U.S. history lasted ten years, it would be reasonable for one to start worrying about the next recession. But according to Moody’s Analytics, the current U.S. expansion is aging well and may still be in mid-cycle.
The mid-cycle phase of recovery is typically the longest phase of the business cycle and occurs before moving into the late cycle phase when an economy overheats and positions itself for the next downturn. While we are probably closer to the next recession than to the onset of the current recovery, it’s worth noting that expansions are becoming lengthier. This is in part due to the role of monetary policy, but also structural shifts in the U.S. economy like improved management of inventory levels.
The current economic expansion is seventy two months old. The three prior expansions lasted an average of ninety five months, noticeably longer than the fifty eight month average for all expansions since nineteen forty five. The average duration of economic expansions between eighteen sixty and nineteen forty five was just twenty six months.
