Economic Trends
Yesterday we wrote an article on the economic cycles, so what is the difference between that and an economic trend? A trend is the direction that the market is moving over time. The cycle, as we learned yesterday, is the different periods that the economy goes through. Economic trends show you what part of the economic cycle we are moving towards. Trends can go up, down or sideways. Upward is how it sounds, and wages are rising. Downward means that the economy is shrinking and unemployment is rising. Sideways just means it’s a steady economy. There are some indicators to look at in the market to see what trend may be occurring, such as gross domestic product, unemployment and consumer confidence. Others include:
Yesterday we wrote an article on the economic cycles, so what is the difference between that and an economic trend? A trend is the direction that the market is moving over time. The cycle, as we learned yesterday, is the different periods that the economy goes through. Economic trends show you what part of the economic cycle we are moving towards. Trends can go up, down or sideways. Upward is how it sounds, and wages are rising. Downward means that the economy is shrinking and unemployment is rising. Sideways just means it’s a steady economy. There are some indicators to look at in the market to see what trend may be occurring, such as gross domestic product, unemployment and consumer confidence. Others include:
· Stock market trends
· Interest rates
· News
It’s important to track trends in the market if you’re in business. It can help you make better decisions, plan and identify opportunities. That being said, it’s important not to focus too heavily and get tunnel vision on the market. This can lead to missed opportunities and making the wrong assumptions. A happy medium needs to be achieved to be successful at tracking economic trends.
Economic Cycles
“Change is the only thing that is constant”
-Heraclitus
Economies cycle between expansions and contractions naturally. These changes are due to employment levels, interest rates, supply and demand, etc. There are four stages in the cyclic pattern: expansion, peak, contraction and trough. Expansion is when GPD is increasing and unemployment is decreasing. The peak is a turning point in which output begins to decrease. Contraction or recession is defined as output decreasing and unemployment increasing. The trough is where recession ends and output begins increasing again. We can dive a little deeper into the characteristics each of these.
“Change is the only thing that is constant”
-Heraclitus
Economies cycle between expansions and contractions naturally. These changes are due to employment levels, interest rates, supply and demand, etc. There are four stages in the cyclic pattern: expansion, peak, contraction and trough. Expansion is when GPD is increasing and unemployment is decreasing. The peak is a turning point in which output begins to decrease. Contraction or recession is defined as output decreasing and unemployment increasing. The trough is where recession ends and output begins increasing again. We can dive a little deeper into the characteristics each of these.
Expansion:
Rapid growth
Low interest rates
Increased production
Steady flow of money through economy
Cost of money cheap
Peak:
Growth hits max rate
GPD spending at highest level
Contraction
Employment falls
Prices stagnate
Surplus supply
Lowering prices
Trough/recession:
Stagnated spending
Stagnated income
Credit hard to attain
Low business sales
Caused by:
Shock or unexpected event or time
Government intervention
Time
These cyclical patterns are part of the economy. It’s important to understand them if you’re in any type of business. The economy will directly affect your brand.