Capital Markets: Observations and Insights

Younger than It Looks

ECONOMY

Cyclical Spending Signals More Expansion

• 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

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

Source: U.S. Bureau of Economic Analysis.

Page 11