Introduction to the Symposium on Business Cycles

N early every long economic expansion in the United States generates intellectual currents claiming that the boom-bust business cycle is over, that there is a “new economy.” The expansion of the 1920s led economists to hope that the new Federal Reserve had learned how to stabilize output— that the decade truly had seen a “New Era”—and to Irving Fisher’s claim on the eve of the 1929 crash that stock prices had reached a “permanent and high plateau” (Galbraith, 1955). The expansion of the 1960s led the Department of Commerce to change the name of its Business Cycle Digest to the Business Conditions Digest, for the New Dimensions of Political Economy (Heller, 1966) opened up by the Keynesian revolution had led to substantial “Progress Toward Economic Stability” (Burns, 1960). Only the long expansion of the 1980s—under the shadow of the just-past Volcker disinflation, the deepest recession of the post-World War II period—failed to generate a large and vocal faction of economists claiming that the business cycle was at an end. The expansion of the 1990s has been impressive along some dimensions, and unimpressive on others. The current long expansion has attained a remarkably low level of unemployment without inflation. Yet it has been accompanied by increases in real wages that have been disappointingly low, even considering the low underlying rate of measured trend total factor productivity growth. One straightforward way to compare the long business cycle expansion of the 1990s to the two previous long expansions in the 1960s and 1980s is to compare the states of all three 30 quarters after their beginning, a comparison presented in Table 1. Thirty quarters after the beginning of the 1980s expansion takes us to the