Why a recession is still some way off

THE period since the Global Financial Crisis (GFC) has seemed unusual in the sense that periodic crises and post-GFC caution have prevented the global economy from overheating and excesses building, in turn preventing the return of the conventional economic cycle. Many, of course, concluded this was permanent and that inflation would never rise again (with talk of concepts like structural stagnation and the Amazon effect).

However, it is becoming increasingly clear that the global economy is moving out of its post-GFC funk - with growth picking up and signs that inflation will too (led by the US) - and arguably returning to a more normal investment cycle. The pullback in shares and surge in volatility seen this month likely indicate an adjustment in investor expectations to reflect this.

Next month, the cyclical bull market in US shares that started in March 2009 will be nine years old.