By Isaac Cohen*
The president of the National Bureau of Economic Research MIT Professor James Poterba, quoted in The New York Times (06/09/19), said “If the United States makes it past July 1 without a recession, the current economic recovery will turn out to have been the longest in American history.”
Several outstanding factors have contributed to this achievement. The expansion was slow, but it pulled out the economy from the Great Recession, the most severe fall since the Great Depression of the 1930’s.
Also, despite the intense political confrontation in Washington, the expansion is a bipartisan accomplishment, which started under Democrat President Barack Obama and has continued under Republican President Donald Trump. Finally, if credit should be given to somebody, it corresponds to the counter cyclical monetary policy implemented by the central bank.
However, the fact that the present expansion is close to becoming the longest on record does not mean that it will continue. Professor Poterba also said nobody knows if we are already entering a recession. In fact, several indicators are pointing to a slowdown.
Job creation has decreased and a contraction in the manufacturing sector may be the consequence of the trade wars, which are also hurting exporters and exacerbating market volatility. Federal Reserve officials have said interest rates may be lowered to counter some of the negative consequences of the trade wars.
The next meeting of the Federal Reserve Open Market Committee is on June 18 and 19.
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*International analyst and consultant, former Director ECLAC Washington.
Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media.