The frequent killer of past U.S. economic expansions is being counted on to extend the life of the now record-long current one.
The hoped-for safeguard is the Federal Reserve — which even former Chair Janet Yellen admits has a history of snuffing out upswings by raising interest rates to contain inflation.
But now, with inflation too low for the Fed’s taste, Chairman Jerome Powell and his colleagues know they’re on the spot to prolong the expansion, which on Monday becomes the longest in records back to 1854 — at 10 years and one month.
Economists generally believe the Fed will succeed in preventing a recession, despite some downside risks.
“My colleagues and I have one overarching goal,” Powell told reporters on June 19. “Sustain the economic expansion, with a strong job market and stable prices, for the benefit of the American people.”
That would also incidentally benefit President Donald Trump, who’s up for re-election next year and has repeatedly urged the central bank to ease policy to boost growth.
The Federal Open Market Committee is expected to lower interest rates at its July 30-31 meeting, perhaps by as much as a half percentage point, as it battles heightened trade tensions and slowing global growth.
And it may not stop there. Jason Cummins, chief U.S. economist at hedge fund Brevan Howard Asset Management, said at a June conference that the Fed could end up reducing rates by 1.25 percentage points to bolster the economy and boost inflation.
The expansion is entering record territory under some threat.
“There are some dark clouds on the horizon,” said Robert Dye, chief economist at Comerica Inc. in Dallas.