As I age, I think about how time seems to be going faster each year. I used to rationalize that the older you get, the shorter each minute or hour is relative to the total time you’ve experienced. But then, I read that the earth is, in fact, moving faster than ever…and time is actually going faster, too.

It’s fitting, though, as market cycles also seem to be going faster. In fact, looking back to 1900, the average length of a recession is 14 months. If you look at more modern financial times after WWII, the average length of a recession is 10 months. Meanwhile, the recession we experienced in 2020 was the fastest we’ve seen, lasting only two months.

It wasn’t just the fastest, it was, due to the shock of a once-in-a-century global pandemic, extremely deep as well. The number of employed people fell 16% in two months, while employment during the 2008 Great Recession fell by 5% in 18 months. Given the depth of it, the Fed used their playbook of cutting rates to 0% and injected unprecedented amounts of stimulus into the markets and economy, with over $4 trillion added to their balance sheet. This was more than they ever have. The economy recovered quickly, in part from the stimulus, and with it came inflation as supply of goods and commodities could not keep up with demand. 

When you look at that all together, it’s no wonder the recovery from the COVID recession is resulting in fast-moving markets and pieces of varying economic environments from the past.  We’ve got inflation and conflict in the world like the ‘70s. Yet, as evidenced by last week’s employment data release, the job market feels more like the ‘90s, but with a devaluation of tech stocks that feels like the early 2000s.

What has been the toughest to figure out is where we stand today. Often inflation and growth sit in a tug of war. If you see inflation subside, it’s typically because growth is too (good ol’ supply and demand). But today, it seems overall growth hasn’t shifted, while inflation looks to have now peaked.

But as I think through it, I believe it's only a matter of time before old economic relationships resurface, where growth falls, so that inflation really cools. I believe disinflation has started – gas prices at the pump are down by over 60 cents in the last month on a national basis and the CPI reported today dropped a bit to 8.5%, down from 9.1% last month. On the growth side, corporate earnings expectations have started to come down, and while the job market has been very strong, planned layoff and hiring freezes have also been making the news. Really, some portion of this has already been discounted in stock prices this year, but volatility, or swings in the market, will likely remain for some time.

Little by little, the impact of what we lived through since 2020 will start to slowly go away, and we will start to pick back up on parts of our old lives and the economy. Perhaps this is where time actually moves more slowly.

Sources: Federal Reserve Board, National Bureau of Economic Research, Bureau of Labor Statistics, AAA Gas Prices