Economic cycle

(redirected from Boom-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 ?
The country has been struck by a 'boom-bust cycle' compounded by reform backlogs and the euro area sovereign debt crisis.
Dr Fischler was speaking amid news that EU cereal production increased by 20% - 50 million tonnes - this year and amid warnings from Copa and Cogeca, the organisations representing European farming, of a boom-bust cycle for producers.
Last night the Royal College of Nursing's regional director for the West Midlands, Ann Leedham-Smith, said the Government was responsible for the "boom-bust cycle" within the NHS.
Tim Congdon, of Lombard Street Research, said: "If these reforms had come 18 years ago we would not have had the boom-bust cycle we did.
But Oxford Economic Forecasting warned that it was showing the classic signs of a boom-bust cycle.
Similarly, while job and economic growth were steady between 2014 and 2016, the energy sector went through an intense boom-bust cycle. Mining and logging employment, which includes energy-related activity, fell by 27 per cent from September 2014 to October 2016.
Labours housing package will stabilise house prices, avoid the boom-bust cycle, increase the number of houses being built, and provide stability to the sector, says Phil Twyford.share on twitter
Efforts to tame the boom-bust cycle through the control of prices and production have repeatedly broken down.
The first story was related to Iceland's boom-bust cycle and problems with macroeconomic management in small, open, and financially integrated economies.
"In less than a decade, we have experienced a complete boom-bust cycle and it is gratifying to note that our resilient business model has delivered profitable growth not only during periods of rapid economic growth but also during periods of relative economic stagnation or contraction."
But it could also bring back the boom-bust cycle in the housing market that caused misery for homeowners in the late eighties.
This boom-bust cycle should be no surprise to economic historians.