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You wait for one bus then three come at once: Andy Murray and economic recessions

So Andy Murray becomes the first Briton to win the men’s singles for 77 years. When might we expect the next celebration? We can look at the typical ‘waiting time’, to give the concept a name, between victories from players from the same country. For example, Roger Federer won in both 2006 and 2007.  Here, the ‘wait time’ for Switzerland in 2007 was just one year. A Swiss national, the same person in fact, won the previous year. He won again in 2009, giving a wait time of two years in this particular case.

Here is the good news. Throughout the entire history of Wimbledon, the typical wait time between a country’s victories in the men’s singles is just a single year. Admittedly, this result is strongly influenced by the fact the UK won every tournament from the start in 1877 to 1907, when an Australian took the title.

Even in the more modern era, the average wait time remains at just a single year. Since Wimbledon resumed in 1946 after the Second World War, on no fewer than 36 occasions, next year’s winner came from the same country as this year’s. Often, of course, this was the same person, such as Federer or Borg. But American dominance around 1950 and Australian command of the 1960s involved several different players, think Laver, Emerson, Newcombe.

The bad news is that, just like price changes in financial markets, there is in what is known in the jargon as a ‘fat tail’.  Eleven times since the war, the gap has been just two years, but then it thins out rapidly. Australia had to wait 15 years between 1987 and 2002, and Spain no less than 42 between Santana in 1966 and Nadal in 2008. Even the US has been waiting since Sampras won in 2000.

We see a similar phenomenon in the wait times between economic recessions. In the Western economies since the late 19th century, the most frequently observed wait time between recession years is just one, meaning that a country has been in recession for more than one year. Around one half of all recession years have a gap of five years or less between. But then, just like in tennis, the frequency falls away. The longest wait time was in Finland where, excluding the war years, there was no drop in output between 1932 and 1991.

The factors behind recessions and winning Wimbledon are obviously completely different. But the deep mechanisms which drive the clustering which we see, the tendency for both winners from a particular country and recessions to be grouped together over time, are very similar. If companies have persistent doubts about the long term future, recessions will be frequent. Sentiment and the actual outcome feedback onto each other. If a country has strong domestic competition, it will produce frequent winners, and winning feeds back onto competition. Regrettably, Murray seems to be a one-off in a UK context, so we just might have another 77 years to wait.

As published in City AM on Wednesday 10th July

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