The average number of months between the first rate hike and a recession has been 42.4 with a median of 35 months. However, if we take out the two extremely long periods of 98 months following the 1961 increase and 84 months following 1994; the average falls to just 28.6 months. Given the fact that the current economic cycle is extremely weak and, at more than 60 months, already the fifth longest Post-WWII recovery, it is likely that even 28 months is on the long end.
The average stock market correction following the first rate has occurred 21.2 months later. If the first rate hike occurs in 2015, this would put the next market correction in 2016 which would correspond with my recent analysis on the collision of the “Decennial and Presidential Cycles:”
However, the IMPORTANT FACT is that the number of times the Federal Reserve has hiked interest rates without a negative economic or market impact has been exactly ZERO
According to the Federal Reserve, corporate debt has risen 27% over the past five years to $9.6 trillion. So, much for those deleveraged balance sheets and when the Federal Reserve does increase interest rates; a major supporter of asset prices in recent years will disappear