A recent article published by The Wall Street Journal claimed equity markets are “on the threshold of the longest bull market ever.” If that doesn’t make economists worry, I don’t know what does. For those who haven’t heard the term before, “bull markets” refer to upward-trending markets.
The last time we were this far into a bull market, it crashed heavily in what is now known as the “tech bubble crash” and sent the economy tumbling.
Being that it is the longest bull market ever, it may raise some flags and spark some questions. Why has it lasted this long? Is it a sign of some type of reversal and rougher times?
All these questions are good to ask and keep in the back of our minds as we make daily economic decisions.
Learning about the financial crisis both as it happened and during the years since has made me wary of strong markets. I almost always question “the good times.”
The most recent recession, from 2008 to 2009, was caused in some part due to the bubble surrounding the housing market. Looking back, we can see how obvious we should have found this.
Cole Lickley | Argonaut
During the formation of the bubble, and even as it was popping, a large majority of people had no idea what was happening or what was going to happen.
With that in mind, is there something going on now that we are blind to?
There was speculation over the last few years the cryptocurrency industry was in a bubble, and in the case of it popping in some way, could send rippling effects through the economy, sending it into a downward spiral. However, the cryptos have since cooled off a bit and that worry has somewhat disappeared.
A few more ideas that have been tossed around include a student debt bubble and a federal debt bubble, both having negative implications if popped. These are both in uncharted territory and there isn’t much precedent here, so this is a big unknown.
With all the uncertainty, there are still some very strong indicators giving support to the fact this bull market could continue for some time.
Inflation is still very low. Our exports are still strong (looking past the trade tariff concerns). Wages and salaries seem to be fine. Consumer spending is doing well. Looking at these indicators, there is little evidence pointed toward an imminent or near crash.
When we add outside factors such as the investigations into President Trump’s administration and possible trade wars, participants in the market are just as confused as I am — very unsure of what will happen.
Although I will still be wary going forward, I am confident in the economy and do not see a collapse in the near future. Still, everyone was just as confident right up until Sept. 29, 2008 — and it was all downhill from there.
Cole Lickley can be reached at [email protected]