Of the many extraordinary aspects of the morphing U.S. economy, none stands \u200bout more than its escape from significant cyclical recession since mid-2009 \u2014 a roughly 17-year run \u200cthat has compounded the stock market boom and eased funding for the AI transformation.<\/p>\n
This is hardly the \u201cGreat Moderation\u201d \u2014 the 1984-to-mid-2007 stretch of sharply reduced macroeconomic volatility. Today\u2019s economy is bumpy, politically noisy, marked by widening wealth gaps and already proving inflationary.<\/p>\n
Yet investors have all but abandoned the idea of a downturn anytime soon. If it can withstand surging \u2060interest rates, tariffs and \u200beven this year\u2019s unprecedented global energy shock, it gets harder to see what would derail it.<\/p>\n
Some of this resilience may be structural rather than simply cyclical, with a more services-heavy economy, stronger balance sheets and faster policy backstops helping absorb shocks that once might have triggered recession.<\/p>\n
Yes, the 2020 pandemic recession was real, triggered by deliberate shutdowns to contain COVID-19. But it was not a cyclical downturn or an unwinding of excess. It was also heavily offset by \u200bmassive government support and proved mercifully brief \u2014 a V-shaped slump and rebound as vaccines were \u200cdeveloped at unprecedented speed. As such, it can almost be discounted in examining the performance of the overall economy over the past 80 years.<\/p>\n
Strip out those two consecutive quarters of real GDP contraction in 2020 \u2014 the accepted definition of recession for most economists \u2014 and the world\u2019s largest economy is clocking its longest recession-free stretch since the Second World War, by some distance.<\/p>\n
We haven\u2019t seen a significant bust since the banking crash, when output contracted for four straight quarters through mid-2009, part of a stretch in which GDP posted five negative quarterly prints in \u200c18 months.<\/p>\n
Before now, the \u200blongest post-World War Two recession-free stretch was the \u200c10-year expansion that ended with the dotcom bust. The 1960s managed nine unbroken years too. But neither comes close to the still-running 17-year stretch excluding the pandemic year.<\/p>\n
This \u200blong stretch has not been entirely smooth: There have been four isolated quarterly contractions \u2060along the way. But none \u2014 including the first-quarter 2025 decline tied to a pre-tariff import surge \u2014 was followed by a second quarterly downswing.<\/p>\n
That means \u2060as many as half of U.S. workers may never have experienced a nationwide cyclical recession in their working lives. The same may be true of many of today\u2019s traders and investors.<\/p>\n
Recession-probability metrics have flashed \u200bred several times over the past six years \u2014 during the 2022 inflation and rate shock, after U.S. President Donald Trump\u2019s tariff sweep early last year, and again during this year\u2019s Iran war and fuel-price spike. But the downturns never came, and few now see one looming.<\/p>\n
Just 5 per cent of respondents in Bank of America\u2019s latest global fund manager survey expect a \u201chard landing\u201d for the economy over the next 12 months.<\/p>\n
The absence of recession, alongside the buildup of aggregate wealth and savings, has helped entrench Wall Street\u2019s dominant \u201cbuy the dip\u201d mentality for years. That \u2060has been reinforced by the concentration of market leadership in a handful of tech megacaps and, over the past three years, by the transformative AI theme.<\/p>\n
However, strategists stress that you don\u2019t need to see a formal recession to see a shakeout in stock markets.<\/p>\n
Deutsche Bank, for example, last year highlighted several large S&P 500 drawdowns that didn\u2019t involve recessions \u2014 including the 25 per cent peak-to-trough fall in 2022 as interest rates surged, a near-20 per cent recoil in 2018 amid Federal Reserve tightening and China trade tensions, and another near-20 per cent swoon in 2015-16 on concerns over China\u2019s growth and domestic political uncertainty.<\/p>\n
None of these episodes was either triggered by or led to \u2060a recession.<\/p>\n
Societe Generale analysts say the current U.S. equity bull market is remarkable in both scale and \u200bduration \u2014 an almost 400 per cent gain in the S&P 500 over 13 years. But excluding the unusually brief plunge around the 1987 crash, they calculate that bear-market downturns over the \u2060past 150 years have taken more than two years on average to run their course, with recoveries to prior peaks taking an average of 11 years.<\/p>\n
However, the SocGen team repeats the old adage that bull markets \u200cdo not die of old age. \u201cThey generally succumb to tightening financial conditions, excessive leverage or economic shocks,\u201d they added.<\/p>\n
Just how closely the long economic expansion and the long equity \u200bbull market remain entwined from here remains to be seen.<\/p>\n
Perhaps most people\u2019s lack of experience with recession makes one less likely, by reinforcing confidence in quick corrections and rebounds. Yet that same inexperience may also breed complacency and carelessness about cycles that now seem, to some, long forgotten.<\/p>\n","protected":false},"excerpt":{"rendered":"Of the many extraordinary aspects of the morphing U.S. economy, none stands \u200bout more than its escape from…\n","protected":false},"author":2,"featured_media":777271,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[901,888,902,879,877,903,45,49,48,876,895,896,891,878,875,46,549,295,894,887,914,880,881,893,889,890,884,904,885,909,910,912,907,911,905,908,882,898,899,714,897,906,865,61,900,892,886,883,913],"class_list":["post-777270","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-alberta","tag-arts-news","tag-bc","tag-breaking-news","tag-breaking-news-video","tag-british-columbia","tag-business","tag-ca","tag-canada","tag-canada-news","tag-canada-sports","tag-canada-sports-news","tag-canada-trafficcanada-weather","tag-canadian-breaking-news","tag-canadian-news","tag-economy","tag-education","tag-environment","tag-federal-government","tag-foreign-news","tag-globe-and-mail","tag-globe-and-mail-breaking-news","tag-globe-and-mail-canada-news","tag-government","tag-life-news","tag-lifestyle","tag-local-news","tag-manitoba","tag-national-news","tag-new-brunswick","tag-newfoundland-and-labrador","tag-northwest-territories","tag-nova-scotia","tag-nunavut","tag-ontario","tag-pei","tag-photos","tag-political-news","tag-political-opinion","tag-politics","tag-politics-news","tag-quebec","tag-sports-news","tag-technology","tag-travel","tag-trudeau","tag-us-news","tag-world-news","tag-yukon"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/777270","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=777270"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/777270\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/777271"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=777270"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=777270"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=777270"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}