At the end of April, the current economic expansion in the US turned 6 years old, and the expansion is the fundamental driving force behind a historically strong increase in corporate earnings and thus recent years of gains for US and global equities. In the most recent earnings season in the US (Q1), the companies in the S&P 500 Index delivered massive earnings growth of 27% (EPS) compared to the same quarter in 2025.
If the economic expansion continues for just one more month, it will move up one place in the hierarchy and replace the expansion in the 2000s as the 6th longest in recorded US history. There is still some way to go, however, to reach the longest expansion ever – the expansion in the 2010s, which lasted just over 10 years (128 months).
Great potential in US equities
We assess, however, that the current economic expansion has a good probability of becoming the longest ever. In other words, we expect at least 3-5 more years of economic growth in the US.
If we are right, corporate earnings can continue to grow at a high pace and, as a result, the US equity market can potentially double in value before the next recession. That is not to say there will not be market fluctuations along the way.
Why the expansion can continue
There are three main reasons for our continued optimism regarding the US expansion:
- The US economy is not suffering from the traditional imbalances that normally lead to recession, such as excessive (and unproductive) investment, inventories that are too large, too much construction and excessive private consumption.
- At the same time, there is no excessive indebtedness among companies and consumers that risks developing into bad loans and thus a financial crisis.
- Most importantly, US companies have generally managed their business exceptionally sensibly, with high profitability and financing of investments via their own cash flow (even if that may be starting to change now). This makes companies less vulnerable to exogenous shocks such as higher interest rates, supply chain challenges, commodity prices etc.
Naturally there is a risk that our expectation regarding the length of the expansion does not hold. The primary risks are political in the form of, firstly, the public finances with a large public deficit and high indebtedness and, secondly, the unpredictable economic policy in the US in general.
The 10 longest expansions in US history
The longest documented expansions in the US economy before they were interrupted by recessions (based on the definition of a recession from the National Bureau of Economic Research).
Source: Danske Bank Asset Management.
This publication is marketing material and does not constitute investment advice. Always be aware that historical returns and the forecasts in this material are not an indication of future returns, which may be negative. Always consult your professional advisers to ensure that you understand the risks before you invest.
