Economic cycle

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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 ?
The house was also informed that the volumes of tractor production that touched 70000 units last year will achieve half that volume this year, and this is typical to the tractor industry which goes through a 5 year cycle of boom and bust.
To consider how consumer financial activity evolves in conjunction with the boom and bust activity in these communities, we develop a panel of FRBNY-CCP accounts, which we standardize across time relative to the peak of rig activity in a given county.
If the first three rounds of boom and bust highlighted the political business cycle perspective--when policymakers orchestrate booms to generate political support--the last two rounds highlight the pitfalls of interest-group politics, regulatory capture, and public choice.
Tregoning's 2012 Cambridgeshire winner Bronze Angel is just 1lb higher than for that Newmarket success while Boom And Bust, the 2011 totesport Mile winner at Goodwood, also has the Doncaster Mile as an alternative option.
Bancnuanaheireann, rated a full 18lb behind Boom And Bust, was the first to crack despite trading at a low of 1.17, but the other two went hammer and tongs all the way to the line with Mister Music (1.04), just seeing off Boom And Bust (surprisingly now lower than 1.3) by a nose.
The conditions of this race certainly favour Boom And Bust and with a handy few pounds in hand off some of his main rivals, he must take full advantage of this opportunity.
While well-beaten by Afsare at Salisbury in August, that form has been well advertised since and Boom And Bust again did trainer Marcus Tregoning proud when narrowly touched off at Newbury last time.
NAOMI MATTHEW: Miss Atomic Bomb, 2.40 Callisto Moon, 3.10 Teeline, 3.45 Raajis, 4.20 Boom And Bust (nap), 4.50 Croquembouche, 5.20 Edged Out.
But the spectacular boom and bust of the housing market during the first decade of the twenty-first century, and millions of foreclosed homeowners, have made it clear that housing is no different from any other asset in its ability to climb and to crash.
Boom and bust banking; the causes and cures of the great recession.
ENGLAND v CZECH REPUBLIC, UEFA U21 CHAMPS, TOMORROW 7.45PM: Stuart Pearce yesterday claimed his critics were not qualified to judge England's performances at the European under-21 Championship and demanded an end to their "boom and bust" mentality.