60% chance that US economic expansion will have 10-year run: Goldman Sachs

Ford Focus vehicles are seen on an assembly line at the Ford Michigan Assembly Plant in Wayne, Michigan, on Jan 7, 2015.
Ford Focus vehicles are seen on an assembly line at the Ford Michigan Assembly Plant in Wayne, Michigan, on Jan 7, 2015.PHOTO: AFP

NEW YORK (BLOOMBERG) - The US economic expansion isn't set to die of old age.

Seventy-six months since it emerged from the longest recession since the Great Depression era, the US economy's upswing is now the fifth longest of 34 since 1900 and almost twice the length of the average.

It has defied "double dip" warnings by seeing off external threats including Europe's debt crisis and the recent China-led slowdown in emerging markets as well as home-grown risks including double-digit unemployment, a government shutdown and repeated cold snaps.

The upbeat analysis released on Monday by Goldman Sachs Group is that it has longer to run. Indeed there is a 60 per cent chance that it will reach the 10-year mark and rival the record of the 1990s, according to economist Zach Pandl's analysis of 355 expansions across 14 economies since 1850.

His research suggests the duration of upswings has increased over time with those before 1950 tending to last only about three years.

Since then, the US average has been around five years compared with one of eight years in all 14 examined economies. There are also extremes. While 30 per cent in the past 65 years have lasted one or two years, another 30 per cent have endured for two decades or more.

The really long ones tended to represent the post-war rebuilding in Japan and western Europe.

The upshot is that even with the Federal Reserve poised to raise interest rates, the historical record suggests to Pandl just a 10 per cent to 15 per cent chance of recession over the next year.

"Although there are clearly some risks to the US economy - especially from developments abroad - we do not expect the expansion to expire of old age," he said.