In June, the economic expansion entered its eleventh year, officially setting a new record as the longest growth cycle in modern U.S. history. The previous record-setter was the 10-year expansion that bracketed the 1990s.
From The Great Recession of 2008, the worst spate of negative gross domestic product (GDP) since The Great Depression, the current growth cycle began in April 2009, and GDP grew only modestly until 2015, when real wage gains accelerated, and that has propelled stronger than expected growth for the U.S. for over four years. Though U.S. growth recently leveled off, it's been a spectacular expansion by modern standards.
The Federal Reserve was nimble in changing interest rate policy as trade war and as real war fears heightened, and the expansion is poised to continue into 2020, but the Fed's model of the economy has not always been accurate in the past. Far from it! The Fed has caused every recession since 1954 by making a monetary policy mistake and misreading the economy — tightening credit too much and choking growth.
Since this expansion began, the Fed's forecast for inflation has been incorrect. Fritz Meyer, an independent economist whose research we purchase, says the Fed's fear of inflation is overblown. If he's right, the Fed may come around and allow the economy to grow through most of 2020 without raising interest rates. Watch for the Fed to show less fear of inflation in the months ahead.