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How the US economy’s luck runs out

Its 121-month expansion won’t last forever but what could bring on a downturn? 

By Barry Eichengreen  

The US Federal Reserve. Photo: Liu Jie/Xinhua News Agency/PA Images

The US economy has now expanded for 121 consecutive months, making the current upswing the longest in the country’s history. There are two potential explanations. To a few exuberant observers, this landmark indicates that we have entered a new era in which downturns are a thing of the past. Actually, Australia and not the US epitomises this possibility. The “Lucky Country” is currently experiencing its 28th consecutive year of economic growth.

A more sceptical view is that the US expansion reflects good…

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