Can economic cycles die of age?
Gautam Khanna, senior portfolio manager of Insight Investment’s Fixed Income Group, both asked and answered that question during a recent press luncheon in New York.
“When you look at the length of the cycle, this is the second longest cycle in history that we’ve had in the U.S. We’re going on 111 months. The longest cycle was 120 months,” Khanna said. “So the question is: Do cycles die of age? And perhaps the answer to that is ‘no.’”
The current cycle just surpassed the 1961-1970 expansion, which was 106 months. The longest cycle, which was 120 months, was the 1991-2001 expansion.
Insight Investment, part of BNY Mellon, is a specialist global asset manager managing assets across liability-driven investment, fixed income, multi-asset and absolute return strategies, and cash management solutions.
Insight manages client assets totaling over $794.1 billion with a growing global presence in the U.K., Europe, North America, Japan and Australia. It has had a significant presence in North America since 1991, and the firm currently manages $37.6 billion in assets for U.S. and Canadian clients.
Something Khanna said he finds quite interesting about this cycle is the growth in real GDP since the recession.
According to Khanna, “this particular cycle is still middle of the pack in terms of the amount of cumulative real growth that we’ve had in GDP.”
In fact, a 2016 Congressional Research Service report finds that the current economic recovery is the slowest recovery seen since World War II. According to the report, real GDP has grown at an average pace of 2% per year during the current recovery, compared with an average rate of 4.3% during the previous 10 expansions.