Is The Boom Doomed?

Recessions aren’t inevitable. But there are some things that might crush the U.S. expansion.

- Peter Coy

Ben Bernanke got a big laugh from economists in Atlanta on Jan. 4. A few minutes after Janet Yellen said, “I don’t think expansions just die of old age,” he replied, “I like to say they get murdered.”

All right, not that funny. But the nerdy repartee between the past two Federal Reserve chairs at the annual meeting of the American Economic Association reveals how central bankers think about recessions—and says something about how likely it is that the U.S. will tip into one over the next year.

The open secret of the economics profession is that its practitioners don’t have a theory for why expansions die. Or rather they have several theories, each of which contradicts the others and none of which is fully supported by the data. Because economists don’t know why recessions start, they can’t predict when one will start.

The likelihood is that the U.S. economic expansion that began in June 2009 will reach its 10th birthday this summer and roll right on, becoming the longest U.S. period of uninterrupted growth since at least 1854. Economists surveyed by Bloomberg see only a 20 percent probability of recession over the coming 12 months. Their median projection for gross domestic product growth is 2.6 percent in 2019, slowing to 1.9 percent in 2020. Nothing on the horizon shouts “recession.”