Is There An Imminent 60-Year Cyclicity In The US Economy? (2009)

Undergraduates: Nian Chen, Zach Chen

Faculty Advisor: Jane Leserman
Department: Economics

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Uncertainty is one of the most apparent characteristics of the current US economy. Pulse-reading the US economy, two major schools of economic thought are emerging on the horizon of the US socio-economic consciousness: one school, campaigned by the renowned investor George Soros, postulates that the current US economic downturn is doomed by the 60-year-long cycle and that the current US economy will go through a rather lengthy depression before its recovery. On the other hand, the so-called “optimistic school”, campaigned by the well-known hedge fund manager Barton Biggs, rejects the “doom sayers” deterministic economic model, speculating that the US social agenda (such as an even greater federal stimulus package, an enhanced credit market, and a lower-tax structure to reduce the US dividend tax), among other economic approaches, can push the US economy out of its current recession relatively quickly.
Analysis of the Dow Jones Industrial-30 Stocks and the associated stock indices, which have been continuously (daily, weekly, monthly and yearly) collected and compiled at the New York Stock Exchange since January 1901, have yielded an array of interesting findings, which apparently do not recognize a 60-year cyclicity in the Wall Street system, hinting that the US economy may not necessarily go through a long manic depressive recession, and that political process, private property, and individual decisions of economic agents may play an active role in US economic recovery.