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 ?
However, there are other conditions that need to be met to recognize the peaks and troughs of an economic cycle. Thus, the area surrounded by the dotted line (from April 2014 to February 2016) in Chart 1 was not recognized as a recession although Historical DI continued to be below 50%.
The higher yields on offer from EM and corporate bonds can help buttress some of the bond price drawdown caused by rising yields; but, by limiting the exposure through a diversified allocation, we can ensure investors do not take on excessive credit risk towards the end of an economic cycle.
Figure 1, which is an interactive flow figure of the economy than can be found at shows the most important data points in order to follow the economic cycle. The flow of the economic cycle moves from left to right on the figure.
Each new economic cycle has a key technological driver that starts forming in the period between the downward and upward phases of the economic cycle (Kondratyev long waves).
(33) The current target is for net lending to average 1 percent of GDP over an economic cycle. (34) Setting the target to cover an economic cycle is appropriate for reasons of stabilization policy.
The FTSE Cyclical Index Series is designed to be sensitive to the economic cycle, whilst the FTSE Defensive Index is designed to be relatively insensitive, thereby providing a mechanism for investors to implement an informed economic view.
A post-meeting statement, issued by the GLC, said the talks focused on the impact of the wage increase on the economic cycle.
"Our economy is so extremely dependent on the economic cycle of the union, which at the time of growing demand created new business and investment opportunities.
FTR said the most recent SCI is at -5.4 percent compared to -11.4 in May, which was the worst SCI reading of this current economic cycle. The firm attributed the 6-point improvement to a slowdown in freight demand growth due to a lull in economic activity, as well as ongoing delays in Federal trucking regulations like driver hours-of-service.
Freeman developed economic cycle interpretations associated with innovations and new technologies' influence on the economic growth and it may be noted that this theoretical approach is very close to the position of the logistic capital management theory, however, it must be noticed that economic theory fails to recognize the limitations of economic growth and the factors influencing it.
"The peak of the economic cycle will pass us by in the next few months."
He also said even if the application got the go-ahead this summer, Peel would have to wait for the "economic cycle" to become stronger before laying the first brick.

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