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The Economic Expansion Is Now The Longest In U.S. History

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The U.S. economy continues to grow at a steady clip despite stock market volatility, and it has just reached a major milestone. 

Cushman & Wakefield U.S. job growth
A Cushman & Wakefield chart showing consecutive months of U.S. job growth

The ongoing economic expansion Monday reached its 121st month, becoming the longest in U.S. history. 

The prior record-long expansion lasted 120 months between 1991 and 2001. The continuous rise in the nation's gross domestic product has coincided with an unprecedented streak of employment growth, with the U.S. adding jobs for the last 104 months. The previous high for consecutive months of job growth was 48.

"This is like Joe DiMaggio's record, it's never been broken," Cushman & Wakefield Chief Economist Ken McCarthy said. "Labor markets are performing outstandingly well, consistently adding jobs and have been for over eight years. We've never seen anything like that before."

Cushman & Wakefield's Ken McCarthy at the NAREE 2019 conference
Cushman & Wakefield's Ken McCarthy at the NAREE 2019 conference

McCarthy, speaking Thursday at the National Association of Real Estate Editors conference in Austin, said job growth has remained steady despite a half-dozen periods when the stock market dropped by at least 10%.

Political events around the globe from Brexit to the 2016 U.S. presidential election to the recent escalation of tariffs have concerned investors, but McCarthy said they have been much less important than the steady job market performance.

"People think because the stock market's going down, that means the economy's going to go down," he said. "No, as you can see throughout the last nine or 10 years we've added jobs consistently month after month. So even though there's volatility in the stock market, even though there's been stuff going on, the economy continues to add jobs." 

While GDP and employment keep growing, many experts foresee a recession coming that would bring the record-long expansion to an end. McCarthy said he doesn't know when a recession will come, but he sees some signs that it could be on the horizon. 

For one, the yield on the 10-year U.S. Treasury note fell below the three-month yield in March. This type of inverted yield curve has predicted a recession every time it has occurred since the 1970s, McCarthy said. 

Recessions are typically sparked by a major event or an excess in a sector of the economy, McCarthy said, and he identified one potential area of excess: venture capital. He said more venture capital is being invested today than any time since 2001, and there are more unicorns — startups that reach a $1B valuation — than any time in history. 

"Where the excess is right now, one place to look is there seems to be a lot of money going into companies that aren't making any money," McCarthy said. "Could this be a stress point for the economy? It could be. I won't say it's going to be, I just think it's something to keep an eye on."