The longest expansion in our history lasted ten years (March 1991 to March 2001), and the current one will match that milestone in mid-2019. This expansion was already in its eighth year when Trump took office; and as I’ve noted here and elsewhere, all business cycles eventually expire from old age unless they are struck down early by an outside force like a four-fold jump in oil prices. We have an elderly expansion on our hands, so the next downturn is a matter of when, not if.
At this point in the business cycle, we should expect to see consumers pull back on purchases of new homes and large items (“durables”), and that should be the case in 2019 even if people’s incomes had not lagged inflation over the last 20 months. As demand cools, we should also expect to businesses slow new investment and hiring, and overall growth will likely fall to or below two percent. At the end of that road lies the next recession in late 2019 or early 2020.
This is the economy’s natural path at this point. After a protracted period of decent growth, the consumer and business demand that previously was untapped has been satisfied. Businesses find it increasingly hard to find promising new investments or skilled workers, fewer consumers are eager to buy new appliances or other large items, and fewer families are in the market for new homes. So, business investment, consumer purchases of durable goods, home sales, and overall economic growth all slow down. That’s the pattern we see when we track those measures over the three years prior to each of the last three recessions.
Chosen excerpts by Job Market Monitor. Read the whole story at Congress in 2019: Why members should prepare for a likely recession
Executives report the least-positive views on economic conditions—at home and in the world economy—that they have all year.
Chosen excerpts by Job Market Monitor. Read the whole story at Economic Conditions Snapshot, December 2018 | McKinsey