Table 1 shows some aspects of economic performance during each period within the past economic cycles as far back as possible. Table 2 summarizes these data for each type of period. Stock performance is excellent during growth and maturity booms and poor during the innovation and shakeout periods. The great bull market of the 1990's is consistent with what one would expect for a growth boom. Economic growth shows no clear pattern, but there is a rising trend in income as a new economy unfolds.
Inflation appears to be higher during the first half of the economic cycle.
Thus, we should expect inflation to continue to fall as we head into the next decade, which will seriously limit the pricing power available to business. We should also expect stronger wage growth which will increase business costs, resulting in a profit squeeze and reduced prospects for stock market gains. Thus, shifting from equities to government bonds as the current bull market draws to a close may well be rewarding. The summary data in Table 2, suggests a model for how a new economy unfolds. Although a new economy begins during the innovation period, it doesn't start to have an impact on the economy until the growth boom.