The American economy continues to record successes, even if this picture is not felt by many households, largely due to a fresh resurgence in inflation rates. According to a new analysis by The Kobeissi Letter, the US economy is now in its 78th consecutive month of expansion, marking the sixth-longest economic cycle since 1854. This performance is significantly higher than the historical average of 49 months, as well as the median duration of 38 months.
78 months without recession – America holds firm
To understand the scale of this achievement, the longest recession-free cycle in the US financial history was recorded from 2009 to 2020, lasting 128 months. That particular record, of course, came to an end due to the fallout from the COVID-19 pandemic, which virtually paralyzed global economic activity. As noted by the team at The Kobeissi Letter, a combination of unique factors appears to have significantly lengthened the duration of the current economic expansion. "Unconventional monetary policy, historically high fiscal deficits, combined with the investment boom in artificial intelligence, appear to be extending the length of economic cycles," it notes. The conclusion is clear: available data shows that the American economy remains impressively resilient.
US approaching historical milestone in unemployment
At the same time, the American economy is approaching another notable benchmark, this time within the labor market. The US unemployment rate remains close to a historic record of consecutive months below 5%, according to Truist Chief Market Strategist Keith Lerner. In a note on Monday, Lerner highlighted that this specific historical streak dates back to the mid-1960s. This development takes on added significance at a time when markets are attempting to interpret September employment data, which came in noticeably weaker than forecasts.
Just 29,000 new jobs created in September
American employers added just 29,000 new jobs in September. The figure fell far short of economists' forecasts, which had anticipated around 90,000 new positions, as well as the average monthly job creation rate over the previous 12 months, which stood at 45,000. Consequently, the data raised concerns over whether the American labor market is beginning to lose momentum. However, the overall picture remains more nuanced.
Sharp revisions to July and August figures
Data for preceding months was also revised significantly downward by federal analysts. Job growth in July, initially estimated at 21,000 positions, was ultimately revised down to a net decline of 10,000 jobs lost. Similarly, August growth was scaled back from 162,000 to 133,000 jobs. In total, revisions for those two months wiped out 60,000 jobs from previous economic estimates. Meanwhile, the unemployment rate edged up slightly to 4.2% from 4.1%, while the labor force participation rate remained unchanged at 61.8%. The latter figure is particularly important, as it indicates that the rise in unemployment was relatively contained and does not currently point to a sharp collapse in the labor market.
"US growth remains intact"
Despite recent weak employment figures, economists argue there are no signs yet of a dramatic shift in the macroeconomic outlook. "The US economic expansion remains intact," BCA Research Chief Economist Peter Berezin wrote in a note on Tuesday. And this is precisely the central contradiction currently facing financial markets. On one hand, the American economy boasts 78 consecutive months of growth, unemployment levels remain near historical lows, and Wall Street continues to price in economic resilience. On the other hand, inflation continues to squeeze household income, while the job market displays clear signs of cooling. The key question for investors is therefore not whether the US has already entered a recessionary period. It is whether the world's largest economy can sustain this exceptionally long growth cycle without sparking a reacceleration of consumer prices or suffering a sharper deterioration in employment.
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