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 ?
Underlying every boom-and-bust cycle of financial instability in modern history is a dangerous undertow of greed, says Magnuson, that is now global and electronic and washing up misfortune around the world at the speed of light.
Jon Treen, a technical leader with Stantec, compared playing the boom-and-bust cycle to playing the market and recommended companies act more like a mutual fund, and diversify.
The volatility of the boom-and-bust cycle can be difficult for a community to overcome.
This regulation aims to regulate the market to avoid another boom-and-bust cycle. A final decision is expected later this year; the ratios of any proposed caps are not yet known.
Dubai: The International Monetary Fund (IMF) has warned Dubai it might need to intervene in its property market to prevent another boom-and-bust cycle of the kind which brought it close to default four years ago.
Writing in terms accessible to most general readers and policy makers, contributors blame the housing bubble, boom-and-bust cycle, and wide swings in economic activity on the destabilizing policies of the US Federal Reserve.
"Ugly" mutations--such as parasites--grow in a boom-and-bust cycle on a host organism.
Perhaps Oregon has left behind the boom-and-bust cycle that characterized its earlier growth patterns.
"During the boom in the early '80s, there were 4,500 rigs operating in the West, but after the bust in '86 there were 488 rigs," said Lewis, putting a historic perspective on Colorado's 100-year boom-and-bust cycle.
If the company goes under, its demise will, in large measure, be a product of the Federal Reserve's engineered boom-and-bust cycle.
"Ruffed grouse have a boom-and-bust cycle," says Brian Dhuey, Wisconsin DNR wildlife surveys manager.
Azerbaijan has long been buffeted by the boom-and-bust cycle of the world's oil markets.