The U.S. Expansion Still Has a Ways to Go

In a Bank of America Merrill Lynch fund manager survey in February, 70 percent of respondents said they believe the global economy is “late-cycle.” Who can blame them? The U.S. expansion is approaching its ninth birthday. That’s pretty long. But the age of an economic cycle has little to do with whether an economy is late. Indeed, in many ways, this expansion still has room to run.

Entering its 105th month, the current expansion has already lasted longer than those in the 1980s and 2000s. Yet a recent report from the San Francisco Federal Reserve concluded, “Empirical evidence indicates that expansions during the past 70 years do not become progressively more fragile with age.” Indeed, as the figure below shows, there is nothing about the length of an expansion that indicates whether it is about to end. If there was something special about a specific length of time, we’d expect to see the expansions cluster around that particular time length. There have been long and short expansions in the postwar era.