Are US Recessions Going Extinct? That’s So 2003

The US economy looks amazingly resilient on the surface. Notwithstanding the two-month Covid-19 recession of 2020, the US hasn’t experienced a downturn since the end of the financial crisis in the middle of 2009. Recently, the streak has elicited a wave of commentary, with smart analysts drawing different conclusions about what it all means for markets. My two cents? Even if the nature and frequency of recessions is changing a bit, it’s dangerous to assume that’s made equity investing any less risky.

The empirical evidence itself is hard to argue with. Looked at through rolling 20-year windows, the US economy spends very little time in recession these days1, whereas it used to be in downturns around 50% of the time in the late 19th and early 20th centuries.