Capital Markets: Observations & Insights

Cyclical Spending Signals More Expansion ​ Birthday Wishes

• The cyclical components of GDP – business investment, residential investment, and consumer durables – have historically risen much higher prior to economic peaks

• The implication is that the economic expansion has room to expand

Cyclical Components % of GDP

Low cyclical spending may indicate room for expansion

30%

28%

26%

Average

24% % of GDP

22%

20%

1970

1971

1973

1975

1976

1978

1980

1981

1983

1985

1986

1988

1990

1991

1993

1995

1996

1998

2000

2001

2003

2005

2006

2008

2010

2011

2013

2015

2016

2018

Source: U.S. Bureau of Economic Analysis.

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