Economic Cycles

Properly assess the meaning of changes in the currency or stock market, as well as the overall economy, helping knowledge about economic cycles. Development of economic processes are cyclical in nature: growth necessarily accompanied by a decrease followed by recovery and new growth. Economic cycles – are periodic fluctuations in the levels of production and consumption (supply and demand). Usually, the dynamics of economic Development (cycle) varies according to the following phases: 1.Retsessiya (Recession) or decline. A reduction in business activity, falling production, reducing employment and income.

Depending on the degree of economic decline and time factor, the recession, distinguish the crisis and depression. Crisis – it is an imbalance in the economy, causing the reduction and suspension of production. Depression – a period during which gradually diverges excess goods, often at very low prices, and take a substantial period of time. 2.Vosstanovlenie (Recovery) or animation. Going rise in economic activity, the beginning of a significant increase in production. 3. Development (Expansion) or continued growth, typically include a cycle recovery and boom. The rise – the recovery period the pre-crisis level of industrial production, during which prices rise, profits, wages, resulting in levels of production and employment are gradually increasing up to full employment and full capacity utilization, usually comparable to the pre-crisis loading and employment.

Boom (peak) – is characterized by full load production capacity, high employment, a very high level of prices, wages. Typically, economic growth during the boom exceeds the level achieved in the previous cycle. The economic crisis that gripped the economy in 2008 virtually all countries in the world, as is known, began in the financial and construction industries the United States. In many media by different charges against management at the U.S. short-sightedness, greed, etc., but if you approach current crisis from the standpoint of the theory of economic cycles, the guilt at the beginning of the U.S. there is no crisis. Crisis – it is an objective reality in the economy, simply, it could happen a little earlier or later, but it would happen required. In the U.S. there is the National Bureau of Economic Research (NBER) (National Bureau of Economic Research – NBER), which is engaged in research and analysis of economic cycles and indicators. This question is very complicated, it all is that economic indicators characterizing the state of the economy, by its nature can be divided into three large groups – it is leading indicators, coincident indicators and lagging indicators. Almost any figure may be regarded as a one group or another, but the degree of accuracy of different indicators in relation to the stage of economic cycle (economic trends) can be different. To accurately evaluate the economics of one or a country, we must determine the phase of the cycle and compare the main economic indicators – GDP, inflation, the size of reserves, discount rate, public debt, the state balance of payments, the unemployment rate. Just at the time of writing (December 12 2008goda) NBER in its methods stated the official start of recession (recession) in the U.S. economy. The main factor in this definition was that that the fall in real GDP in the U.S. lasted for two consecutive quarters in a row. Hence, it remains to survive the depression (and possibly short-term type, the crisis will be without depression) and will welcome recovery.