Submitted by Taps Coogan on the 24th of August 2018 to The Sounding Line.
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Wednesday August 22nd, 2018 marked the 3,453rd consecutive day of the current bull market in US equities, officially making it the longest in American history. As the following chart from Statista shows, the current bull market is now ‘older’ than the previous record holder, the 1990’s bull market and Dot-com Bubble.
According to the common definition, a US bull market starts when the S&P 500 rises 20% and continues until it has fallen 20% from any high set since the initial 20% rise.
You will find more infographics at Statista
The US economy took longer to recover from the 2008 financial crisis and recession than the stock market. As a result, while the stock market is now already in record bull territory, the economy itself will take until the second half of 2019 to arrive at record territory.
While the unusually long duration of the current bull market is something to celebrate, it has been largely the result of years of the most accomodative monetary policy in history. Record low interest rates and quantitative easing have been great for the declining percentage of Americans that own stocks and other financial assets, but they have also led to a record buildup of debt, particularly by the US federal government. Instead of taking advantage of the ‘good times’ to cut the deficit and get its fiscal house in order for the next recession, the US federal government is now accelerating its deficit spending. While tax cuts and other recent pro-growth economic policies may extend the bull market further, eventually this bull market will end. When it does, tax revenues will collapse and government spending will surge, as they always do during recessions, and today’s trillion-dollar-a-year deficits will look like nothing.
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