DEEP DIVE: A Very Brief History of Recoveries & Expansions

How much longer might the current economic expansion last? That remains a widely disputed question. The debate started between the hard-landers, soft-landers, and no-landers in early 2022, continued in 2023, and now continues in 2024. We remain in the soft-or-no-landing camp.

We have a sense of “déjà vu all over again” about this debate. We were among the no-landers for several years following the 2007-08 recession. We even compiled a “Panic Attack” list to chronical all the recession scares in the stock market that didn’t pan out (Table). It took a global pandemic to cause a recession in 2020. However, it lasted only two months, from March through April, i.e., during the Covid-19 lockdown.

Based on the Index of Coincident Economic Indicators (CEI), from the peak of the last business cycle through the brief recession and rapid recovery, it took 20 months to make up the lost ground (Fig. 5 table). The average of the six prior full-recovery periods was 37 months (ranging between 19 months and 77 months).

Recoveries are followed by expansions to new record highs in the CEI. The previous six post-recovery expansions lasted 67 months on average, or five and a half years! That means that the debate among the landers could last until mid-2026, if it doesn’t end sooner … or later.