Last year witnessed a growing repudiation of Exhibit 30: Duration of Post-WWII Expansions this status quo, evident in the surprise outcome This expansion is already the fourth-longest since WWII. of the UK and Italian referenda, as well as US ROcousiy DUNRtION faUATEERS presidential election. As we begin 2017, these 45 winds of change are gaining force. Central banks Oo] are acknowledging the often counterproductive 6 a impact of ultra-easy monetary policy and 30 ae shifting attention to the eventual withdrawal of 05 24 accommodation. At the same time, the recovery 0 19 in commodity prices and recent firming in global 3s pare . 15 13 growth is shifting the focus from deflation to i reflation. The same could be said of the increasing " : focus on expansionary fiscal policy. ° a co While this change brings hope, it also carries " Mar-91 Feb-61 Nov-82 Jun-09 Nov-01 Mar-75 May-54 Nov-70 Apr58 Jul-80 risk. In the US, fiscal stimulus arrives eight years BUSABSSIGVEIS THOlgh into an economic expansion that is already near vata a of December 2018: full employment, increasing the danger of the Note: The recovery is measured from the business cycle trough. economy overheating. Although the Federal Source: Investment Strategy Group, National Bureau of Economic Research. Reserve could respond by hastening the pace OE of rate hikes, it might overdo it. Similarly, an overzealous negotiating stance on existing trade United States: Age Is Just a Number relationships or imposition of protectionist policies by the incoming US administration could staunch The US economic expansion is getting old by the flow of trade—an outcome that would be historical standards. At nearly eight years, it is particularly damaging to emerging markets. And already the fourth-longest in post-WWII history in Europe, a victory of the far right in the French and poised to be among the top three by the presidential election could unleash fears about middle of this year (see Exhibit 30). Concern that Fra