Economic cycle

(redirected from Boom and Bust Cycle)

Economic Cycle

The period of time during which an economy evolves from a state of health to fragility to recession to recovery and back to health. Every capitalist economy has cycles to a greater or lesser extent. However, regulations may be designed to curtail them (or, more accurately, to attempt to maximize the good times while preventing the bad times); this is rarely successful. Factors affecting economic cycles include the level of inflation, the availability of capital, natural disasters, and political events. Some industries are considered countercyclical, meaning that demand for their products remains relatively constant regardless of economic circumstances; some even do better in recessions. Other industries, mainly those considered luxuries, are greatly dependent on economic cycles. An economic cycle is often colloquially called a boom-and-bust cycle.

Economic cycle.

An economic cycle is a period during which a country's economy moves from strength to weakness and back to strength.

This pattern repeats itself regularly, though not on a fixed schedule. The length of the cycle isn't predictable either and may be measured in months or in years.

The cycle is driven by many forces -- including inflation, the money supply, domestic and international politics, and natural events.

In developed countries, the central bank uses its power to influence interest rates and the money supply to prevent dramatic peaks and deep troughs, smoothing the cycle's highs and lows.

This up and down pattern influences all aspects of economic life, including the financial markets. Certain investments or categories of investment that thrive in one phase of the cycle may lose value in another. As a result, in evaluating an investment, you may want to look at how it has fared through a full economic cycle.

References in periodicals archive ?
This boom and bust cycle is a big impediment in the growth of this sector in terms of volumes and quality.
Michael Noonan said it was a "bit scary" as the country was in danger of going into another boom and bust cycle.
A crucial element in creating the recent boom and bust cycle in the United States, ending in financial crisis and recession, was the unconstrained monetary policy of our central bank, the Federal Reserve.
of California, Riverside) explores the causes of the boom and bust cycle that he contends causes the U.S.
His long-term vision will seek to assure that the nation does not return to a boom and bust cycle. He also added that bubbles give the "illusion of wealth." By investing in clean-energy and health a more prosperous nation can emerge, he said.
The group warned that unless more was done to plug the shortfall, the UK risked a repeat of the boom and bust cycle, with a shortage of supply pushing up prices again following the current downturn.
And while investors won't turn their back on oil in the same way they did with dot.coms, the scale and fall-out of this boom and bust cycle could be much more damaging.
Karina Purang, financial services analyst at Datamonitor and author of the report, said: "We do not believe the housing market is on the road to a house price crash, mainly because the economy remains healthy, but the threat of a boom and bust cycle is still present.
Karina Purang, a financial services analyst at Datamonitor and author of the report, said: "We don't believe the housing market is on the road to a house price crash - mainly because the economy remains healthy - but the threat of a boom and bust cycle is still present.
He said the boom and bust cycle of the last few decades had given way to a balance.
For 10 years Algoma Steel Inc.'s (ASI) seamless tube mill was labelled a white elephant, a money-losing victim of the boom and bust cycle of the oil and gas exploration industry.
The demise of marine fisheries is occurring on an unprecedented global scale, yet the collapse of individual fisheries has occurred many times throughout history -- a boom and bust cycle familiar to many fishery managers.