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 ?
STEM may not always bear fruit, but isn't it better to cultivate one for a career in a boom-and-bust field rather than push them toward a job where the prospects are even more dim?
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.
Having said that, the book makes one itch to get out in the boondocks and rediscover the old boom-and-bust towns, diamond frauds, and Native American battle sites.
If the company goes under, its demise will, in large measure, be a product of the Federal Reserve's engineered boom-and-bust cycle.
Take the huge boom-and-bust population cycles in some wildlife species.
If China's boom-and-bust pattern of economic growth continues in this way--led by investment practices which are often economically irrational and tainted with corruption--then the following nine-point version of Scenario Three may not be too far-fetched.
In preparing the town's IT strategy, Burton says rather than chase down the boom-and-bust employment scenarios associated with hosting outbound call centres, they concentrated on opportunities to create a technology base, stock a talent pool of high tech jobs, and later on provide a source of tech support to private enterprise.
Finally, step inside the Rangers clubhouse, where the final crater from the boom-and-bust decade sits.
FOOTBALL is bracing itself for more player cuts, staff redundancies and heavy losses as the effects of the boom-and-bust bubble of the 90s continue to bite.
They say the trend will continue, with Scots avoiding massive mortgage debts which cause the boom-and-bust swings in the south east of England.
investors, VCs :seem to be avoiding industries affected by the boom-and-bust 'cycle of capital spending on broadband and the Internet.
British journalist John Cassidy chronicles the 1990s boom-and-bust of Internet stocks in his new book 'Dot.