• A great gimmick in the popular fantasy novel series Game of Thrones[1] is that seasons can last years instead of months. We want to use that analogy to compare the most recent business cycle expansions in the US. The 2009-2019 cycle was unusually long and slow-paced. It might have been the longest expansion on record, but we would have to check the National Bureau of Economic Research (the organization that is tasked with calling business cycle turning points). Your average business cycle expansion probably lasts five or six years before the Fed murders it with over-tightening monetary policy.
  • Because of relatively successful monetary policy by the Fed (relatively!), the 2009-2019 cycle could have easily lasted for a couple of years before the Fed would have killed it off. Then the pandemic hit. In sharp contrast to the prior cycle, we’re now in one of the fastest paced cycles on record. We went from total collapse and hunkering down to reflation. US unemployment soared to 15% and is now below 5%. Deflation/disinflation fears have made way for reflation. Stagflation and labor shortages are now the talk of the town. All within an 18-month period.

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[1]  It’s actually the Song of Ice and Fire series, but because of the popularity of the TV series everybody refers to the thing as a Game of Thrones.