4 Years of U.S. Economic Recovery
If you are investing in the US economy, and worrying about recession, fret not. Researchers at Goldman Sachs Group, led by Chief Economist Jan Hatzius, analyzed a data set of developed-market business cycles. Among developed economies, the average length of an economic expansion has been expanding since 1950. The longest U.S. expansion lasted 10 years, from 1991 to 2001.
Before 1950, the business expansion lasted for three years in average. Since 1950, the economy lasted an average of eight years—though the average in the U.S. over the same time has been around five years.
Goldman created a scatter plot of 255 expansions across 14 developed economies, depicted below:
The investment bank pegs the probability of the recovery enduring for another three and 2/3 years at 60%. That calculation only includes data from expansions after 1950.
The following chart outlines the probability of the recovery’s survival up to, and beyond, that 10-year milestone.
According to the data, we would estimate a recession of 10% to 15%, according to the data.