Could 2006 be the historical analog to 2026?

Research evidence excerpt

Could 2006 be the historical analog to 2026?

Equity Research

Sustainable Investing

15 July 2026

Public Policy

Could 2006 be the historical

analog to 2026?

A trip through the political time machine suggests some

familiar signposts. Michael McLean(v)

+1 212 526 9393

michael.mclean@barclays.com

The Council of Economic Advisers' Economic Report of the President took a victory lap: the US BCI, US

economy expanded above the historical average and faster than any other major industrialized

economy in the world in 2006. The unemployment rate dropped to an average of 4.6% (in

October, a month before the 2006 midterm election, the unemployment rate was 4.4%, the

lowest since May 2001), and jobs grew by an average 187,000 per month.1

Consumer spending was strong as employment and income made solid gains. Business

investment rose considerably. M&A activity increased. Financial conditions were favorable.

Equity markets recorded sizable gains, bolstered by strong growth in corporate earnings for

consecutive years.2 The DJIA closed at its first all-time high in more than 6 years. Spreads on

corporate bonds were tight.

Crude oil prices swung dramatically, and gas prices dominated the public’s attention.3 Retail

gasoline hit a record high that summer, driven by conflict in the Middle East, but had come

down by the time of the midterm election.4 Inflation picked up in the first half, largely driven by

elevated energy prices, although prices cooled in the second half of 2006.

The US had a new Fed chairman. Ben Bernanke succeeded Alan Greenspan on February 1.5

Central bankers described the US economy as showing "considerable resilience."6

The housing market peaked in mid 2006 and began cooling, but the systemic risk embedded in

mortgage credit was not yet priced into politics or markets.