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 ?
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.
His long-term vision will seek to assure that the nation does not return to a boom and bust cycle.
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.
coms, the scale and fall-out of this boom and bust cycle could be much more damaging.
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.
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.
He said the boom and bust cycle of the last few decades had given way to a balance.
But the Centre for Economic and Business research has ruled out a return to the boom and bust cycle of the 1990s.
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 Upper West Side is one area experiencing a residential renaissance after the boom and bust cycle of the 1980s.
For animals living through such a boom and bust cycle, says Martin, the capacity to reach marrow inside a bone may mean the difference between life and death.