For those who think there’s no recession on the horizon

Sluggish national economic growth might cause us to forget that we’re technically dealing with a long-running recovery from the last recession. Gene Epstein reminds us of the facts in the latest issue of Barron’s.

Can you actually say something good about the current economic expansion? Indeed, you can. True, it has been the slowest expansion on record. But having now finished its seventh year—after launching in the third quarter of 2009—it ranks high in terms of longevity.

Of the past 11 expansions since World War II, only three lasted longer: the one in the 1960s (eight years, three quarters); 1980s (seven years, three quarters); and 1990s (10 years). At seven years and counting, this expansion need only persist through the second quarter of next year to log eight years, thus lasting longer than the 1980s expansion. It has already outdistanced the previous period of growth, which ended in 2007 and lasted just six years.

Why does longevity matter? If the game has more innings, you get more times at bat. In the previous expansion, for example, private-sector gross domestic product grew at an average annual rate of 2.5%, while in the recent expansion, growth has averaged 2.3%. Which expansion performed better? There is more than one answer to that question.

In terms of yearly rates of growth, the previous expansion edges out the current one. In terms of total growth, the current expansion wins, since it has lasted a year longer. Arithmetically, seven years at an average of 2.3% grows output more than six years at 2.5%. …

… SINCE THE EXPANSION of 2002-07 was the second slowest on record, the above comparison set a low bar. But still, this expansion deserves points for persistence, and for the fact that it has not yet slid into recession.

Those straw-grasping thoughts are inspired by the Aug. 10 release of the monthly Blue Chip Economic Indicators, always worth a look for summarizing the consensus of 50 forecasters, which generally does better than any single forecaster. The consensus now expects this year’s growth in real GDP to run at the slowest rate since 2012. …

… For 2017, the consensus expects a pickup in growth to 2.2% on a fourth-quarter-over-fourth-quarter basis. If the expansion lasts through the fourth quarter of 2017, it will have persisted for 8½ years, just one calendar quarter shy of matching the longevity of the 1960s expansion. One anticipatory cheer for that.