Why the U.S. Economy Won't Fall Into Recession Anytime Soon

NEW YORK (TheStreet) -- The U.S. expansion is entering its seventh year but is aging well and has plenty of room to run. Still, there have been plenty of ups and downs, and the economy's poor performance early this year rekindled concerns that the expansion was in serious jeopardy.

Based on the economic data, we believe the expansion is midcycle. This is typically the longest phase of the business cycle before moving into the late-cycle phase, characteristic of an overheated economy poised to slip into recession. Read More: U.S. Economic Expansion Is Not in Jeopardy

There are important questions. Is this expansion getting old, and will it age similarly to prior ones?

Long in the Tooth?

While we're probably closer to the next recession than to the beginning of the recovery, it's important to remember that expansions are getting longer. Expansions have lengthened because of structural changes, including reduced macroeconomic volatility from improved policy, better management of inventories the rise of the more stable service economy and technological change.

The current expansion is 72 months old, but age is in the eye of the beholder. The three expansions prior to the Great Recession lasted an average of 95 months. This is noticeably longer than the 58-month average for all expansions since 1945. The average duration of an expansion between 1860 and 1945 was 26 months.

While this expansion is already longer than the average since World War II, expansions don't die of old age. Expansions normally end when the economy overheats. For example, the past few expansions have ended a few years after the economy reached full employment, leading to an acceleration in wages and inflation and tighter monetary policy. We don't expect the economy to reach full employment until this time next year, implying the next recession wouldn't be until sometime in 2019.

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