In a note to investors, AllianceBernstein US economist and director of global economic research, Joseph Carson, explained that while the current cycle “isn’t relatively strong”, it has been resilient to the various events that have “shaken” global and US economies.
“The fact that the economy added 287,000 jobs last month is an indication that the current growth cycle remains alive and well,” he said.
Mr Carson noted that at the end of a growth cycle, there “tends to be a broad rise in costs, both labour and non-labour”, adding that current wage growth is “relatively modest”, despite competitive pressures and low unemployment pushing wages up.
“We would not be surprised if the 4 per cent wage-growth figure achieved in prior cycles is hit at some point, but it could take a few more years to get there,” he said.
While the economic and financial conditions that typically signal the end of a growth cycle are “largely absent”, Mr Carson warned that monetary policy could have an impact on the continuation of the cycle.
“Odds favour the US growth cycle continuing for a few more years," he said, "with one big caveat: we must always be mindful of the potential unintended consequences of non-conventional monetary policy, as there is nothing in the history books to help guide us.”
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