Business cycles: Running out of time

Posted: January 7, 2013 in economy
Tags: , ,

WITH another month of jobs data in hand, economics writers can’t help but note the remarkably stable pattern in employment growth. Payrolls rose by 155,000 jobs in December of 2012, according to figures released by the Bureau of Labour Statistics on Friday. Average monthly employment growth for all of 2012 was 153,000—the same as in 2011. This coincidence could be down to shortcomings in data gathering; new revisions may well nudge up the rate of employment growth in 2012. We had better hope so. 

December marked half a decade since the beginning of the last recession and 42 months since the recovery began in June of 2009. It would be nice if business cycle expansions never had to end. In some places they seem not to (see Australia). Yet new downturns have been an inevitability in modern economies. The chart at right shows the duration of expansions since the Second World War. On average, the economy has grown about 58 months at a time during this period, an age the current American expansion will reach in April of next year. Since the Volcker recession, good times have gone on for longer—95 months on average—though the expansion of the 2000s was just 73 months long, a milestone the current recovery will reach in July of 2015. Perhaps the present recovery will more closely resemble that of the 1990s, which lasted a full decade. But it would probably be …

via Economic Crisis


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