Procyclic
Categories: Econ
No, it's not a type of condom. When something is “procyclic,” it means it positively correlates with the state of the economy in general. In other words, its value goes up when the economy improves and goes down during economic downturns.
For example, real estate prices tend to be procyclic. When the economy is doing well, housing prices go up. When the economy is doing not so well, like after the 2008 recession, housing prices tend to go down. Car prices, smartphone prices, and even grocery prices tend to behave the same way.
But it’s not just goods and services that can be procyclic. Our own societal behavior can also move in line with the economy. Think about it: in a stagnant or recessing economy, we tend not to spend as much on unnecessary stuff like vacations and dinners at fancy restaurants. Our collective discretionary decreases as the economy declines. And legislators aren’t immune either. Consider the Federal Reserve’s practice of raising and lowering interest rates to stimulate economic growth. They don’t make those decisions willy-nilly; they are always positively correlated with the economy as a whole.
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Finance: What is a Business Cycle?3 Views
Finance allah shmoop What is a business cycle Well here's
a guy giving his cycle the business Yeah the bike
moves forward in time but this little white mark on
the tire while it keeps returning to the same place
again and again and again So yeah that's the foundation
of the notion of business as a cycle time continues
but you know business gets hot then cold then hot
then cold and yeah you get the idea Well why
is this the case Well lots factors They mostly revolve
around the wild pagan dance of greed and fear And
they get exacerbated when governments actively monkey around with the
cost of renting money otherwise known as the raising and
lowering of interest rates And if you're new to this
whole space if you lower interest rates and make money
cheap to borrow you heat up the economy or at
least you encourage it to get hot And if you
raise the cost of borrowing money well then you're going
to try to cool it off And the reason he
might want to do that is if inflation is roaring
right All right well in the us the business cycle
Runs roughly every eight years for what is called the
short cycle of business cycles for reasons only partly known
to humankind the money cycle revolves around the presidential election
cycle when historically every couple of terms the population gets
sick of one process of messing up government and they
choose to elect a new way to mess up government
So that's The short cycle happens every seven or eight
years and you see it in the stock market with
generally meaningful corrections Along that pattern there's also ate a
long business cycle that sees major shift about every quarter
century World wars affected numbers Technology innovation affects the numbers
and other exogenous factors like pollution and labor replacement by
robots Yeah yeah it's coming and healthcare or disease changes
and or big innovations that completely repaint the pavement such
that the tire slipped and turn and twist trying to
keep the bicycle upright The key goal Look outfor bollards