{"id":2221,"date":"2025-12-16T12:33:42","date_gmt":"2025-12-16T12:33:42","guid":{"rendered":"https:\/\/globaleasyforex.com\/blog\/?p=2221"},"modified":"2026-03-27T16:21:37","modified_gmt":"2026-03-27T16:21:37","slug":"what-is-an-economic-cycle-looking-at-different-definitions","status":"publish","type":"post","link":"https:\/\/globaleasyforex.com\/blog\/what-is-an-economic-cycle-looking-at-different-definitions\/","title":{"rendered":"What Is an Economic Cycle? : Looking at Different Definitions"},"content":{"rendered":"\n<p>This article is not financial advice, just a collection of past information and does not guarantee or predict anything in the future.<\/p>\n\n\n\n<p>An economic cycle (or <strong>business cycle<\/strong>) is the natural rise and fall of economic activity over time. Almost every country experiences periods of growth (expansion) followed by periods of slowdown or decline (contraction), then recovery again. These waves are as old as modern economies themselves, but the way we, as human, define and measure them has changed dramatically over the past 250 years.<\/p>\n\n\n\n<p>Here are the main historical versions of the economic cycle and how our understanding has evolved.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">1. Pre-1850: Trade and Harvest Cycles (18th\u2013early 19th century)<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Length: 3\u20138 years<\/li>\n\n\n\n<li>Main driver: Agriculture, weather, <a href=\"https:\/\/globaleasyforex.com\/blog\/how-war-affects-the-global-shipping-industry-in-2026\/\" data-type=\"post\" data-id=\"4008\">wars<\/a>, and trade disruptions<\/li>\n\n\n\n<li>Who noticed it: Early political economists like William Jevons relate sunspots to harvest failures that caused booms and busts in Britain.<\/li>\n<\/ul>\n\n\n\n<p>Example:<br>1815\u20131819 post-Napoleonic War <a href=\"https:\/\/globaleasyforex.com\/blog\/economic-depression-and-effect-on-stock-and-forex-market\/\" data-type=\"post\" data-id=\"2731\">depression<\/a> \u2192 1825 UK banking panic \u2192 1836\u20131839 recovery \u2192 1847 railway crash.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">2. The Classical \u201cJuglar Cycle\u201d (1850s\u20131900s)<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Named after: French doctor Cl\u00e9ment Juglar (1862)<\/li>\n\n\n\n<li>Length: 7\u201311 years<\/li>\n\n\n\n<li>Focus: Fixed investment booms (railways, factories, canals) \u2192 overbuilding \u2192 banking crises \u2192 liquidation \u2192 recovery<\/li>\n\n\n\n<li>He may be the first noted person to systematically study bank balance sheets and prove cycles were real, not random.<\/li>\n<\/ul>\n\n\n\n<p>Example:<br><a href=\"https:\/\/globaleasyforex.com\/blog\/what-is-panic-in-financial-markets-and-its-effects-on-markets\/\" data-type=\"post\" data-id=\"2774\">Panic<\/a> of 1873 (railway bubble burst) \u2192 Long Depression until 1879 \u2192 recovery in the 1880s \u2192 Panic of 1893 \u2192 Panic of 1907.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">3. The Kitchin Inventory Cycle (1920s)<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Named after: Joseph Kitchin (1923)<\/li>\n\n\n\n<li>Length: 3\u20135 years (minor cycle)<\/li>\n\n\n\n<li>Cause: Companies over-stock or under-stock inventory based on sales forecasts \u2192 when they misjudge, they cut or increase production sharply.<\/li>\n<\/ul>\n\n\n\n<p>Still used today by <a href=\"https:\/\/globaleasyforex.com\/blog\/central-banking-history-and-what-it-is-from-ancient-to-modern\/\" data-type=\"post\" data-id=\"2428\">central banks<\/a> to explain short-term fluctuations inside longer cycles.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">4. The Kuznets \u201cInfrastructure\u201d or Building Cycle (1930)<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Named after: Simon Kuznets (later Nobel winner)<\/li>\n\n\n\n<li>Length: 15\u201325 years<\/li>\n\n\n\n<li>Driver: Construction and infrastructure waves (railroads \u2192 suburbs \u2192 highways \u2192 urban renewal).<\/li>\n<\/ul>\n\n\n\n<p>Example:<br>U.S. housing and railway booms in the 1830s\u201350s, then again in the 1950s\u201370s suburban explosion.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">5. The Kondratiev Long Wave (1920s \u2013 still debated)<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Named after: Soviet economist Nikolai Kondratiev (1925)<\/li>\n\n\n\n<li>Length: 45\u201360 years<\/li>\n\n\n\n<li>Idea: Major technological revolutions create super-long upwaves followed by downwaves.<br>1st wave: Industrial Revolution &amp; steam (1780s\u20131840s)<br>2nd: Railways &amp; steel (1850s\u20131890s)<br>3rd: Electricity, chemicals, automobiles (1900s\u20131940s)<br>4th: <a href=\"https:\/\/globaleasyforex.com\/blog\/crude-oil-the-lifeblood-of-modern-civilization\/\" data-type=\"post\" data-id=\"1669\">Oil<\/a>, electronics, aviation (1950s\u20131980s)<br>5th (debated): Information technology &amp; internet (1990s\u2013??)<\/li>\n<\/ul>\n\n\n\n<p>It is said that Kondratiev was sent to the Gulag by Stalin for suggesting capitalism could have long periods of renewal.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">6. The Modern \u201cBusiness Cycle\u201d \u2013 NBER Definition (1940s\u2013today)<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Used by: National Bureau of Economic Research (U.S.) and most central banks<\/li>\n\n\n\n<li>Definition: \u201cA cycle consists of expansions occurring at about the same time in many economic activities, followed by similarly general <a href=\"https:\/\/globaleasyforex.com\/blog\/recession-the-economic-contraction-and-its-market-wide-reverberations\/\" data-type=\"post\" data-id=\"2935\">recessions<\/a>, contractions, and recoveries.\u201d<\/li>\n\n\n\n<li>No fixed length \u2013 average U.S. expansion since 1945 is about 5\u20136 years, recessions 11 months.<\/li>\n<\/ul>\n\n\n\n<p>Official U.S. examples (NBER dates):<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>December 2007 \u2013 June 2009 (Great Recession)<\/li>\n\n\n\n<li>February 2020 \u2013 April 2020 (COVID recession \u2013 shortest on record)<\/li>\n\n\n\n<li>Current expansion ongoing since May 2020 (longest in history until broken).<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">7. The Four Classic Phases Everyone Learns Today<\/h3>\n\n\n\n<p>Regardless of length, almost every cycle is described using these four stages:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>Expansion \/ Recovery<br>Rising GDP, <a href=\"https:\/\/globaleasyforex.com\/blog\/the-effect-of-employment-data-news-in-the-stock-and-forex-market\/\" data-type=\"post\" data-id=\"2171\">falling unemployment<\/a>, rising confidence, credit easy, stocks and property rise.<\/li>\n\n\n\n<li>Peak<br>Economy at maximum output, inflation often rising, central banks start tightening.<\/li>\n\n\n\n<li>Contraction \/ Recession<br><a href=\"https:\/\/globaleasyforex.com\/blog\/the-gdp-growth-report-its-role-as-a-macroeconomic-signal-for-financial-markets\/\" data-type=\"post\" data-id=\"2910\">GDP<\/a> falls for two consecutive quarters (common rule-of-thumb definition), unemployment rises, profits fall.<\/li>\n\n\n\n<li>Trough<br>Bottom of the cycle \u2013 activity stabilizes, central banks cut rates, recovery begins.<\/li>\n<\/ol>\n\n\n\n<h3 class=\"wp-block-heading\">Real Recent Examples (2020\u20132025)<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>2020: Sharp COVID trough (global GDP -3.4 %)<\/li>\n\n\n\n<li>2021\u2013mid-2022: Extremely fast recovery (supply-chain rebound + <a href=\"https:\/\/globaleasyforex.com\/blog\/fiscal-stimulus-vs-monetary-stimulus-whats-the-difference\/\" data-type=\"post\" data-id=\"3001\">stimulus<\/a>)<\/li>\n\n\n\n<li>Late 2022\u20132023: \u201cSoft landing\u201d attempt in U.S. \u2013 growth slowed but no official recession<\/li>\n\n\n\n<li>2024\u20132025: Many analysts expect a mild slowdown or short recession as <a href=\"https:\/\/globaleasyforex.com\/blog\/interest-rate-and-central-bank-policy-cycles-the-macroeconomic-pendulum\/\" data-type=\"post\" data-id=\"2385\">high interest rates<\/a> bite with a lag.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">The Bottom Line<\/h3>\n\n\n\n<p>Economic cycles have always existed, but our explanation of them keeps evolving:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>18th century \u2192 weather &amp; war<\/li>\n\n\n\n<li>19th century \u2192 investment booms &amp; <a href=\"https:\/\/globaleasyforex.com\/blog\/major-economic-crises-in-history\/\" data-type=\"post\" data-id=\"3631\">banking crises<\/a><\/li>\n\n\n\n<li>20th century \u2192 inventory swings + infrastructure + technology waves<\/li>\n\n\n\n<li>21st century \u2192 central bank policy, global supply chains, and pandemics<\/li>\n\n\n\n<li>Maybe there will be more change coming in the next century? Who knows?<\/li>\n<\/ul>\n\n\n\n<p>The length and causes change with each era, but the basic pattern \u2014 growth \u2192 overconfidence \u2192 correction \u2192 renewal \u2014 has repeated for at least 250 years and shows no sign of disappearing.<\/p>\n\n\n\n<p>See also : <a href=\"https:\/\/globaleasyforex.com\/blog\/understanding-phases-in-asset-and-commodity-prices\/\" data-type=\"post\" data-id=\"4315\">Understanding Phases in Asset and Commodity Prices<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>This article is not financial advice, just a collection of past information and does not guarantee or predict anything in the future. An economic cycle (or business cycle) is the natural rise and fall of economic activity over time. Almost every country experiences periods of growth (expansion) followed by periods of slowdown or decline (contraction), [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":1677,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_wp_rev_ctl_limit":""},"categories":[104],"tags":[122,110,128],"class_list":["post-2221","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general-knowledge","tag-economic","tag-fundamental","tag-history"],"_links":{"self":[{"href":"https:\/\/globaleasyforex.com\/blog\/wp-json\/wp\/v2\/posts\/2221","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/globaleasyforex.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/globaleasyforex.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/globaleasyforex.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/globaleasyforex.com\/blog\/wp-json\/wp\/v2\/comments?post=2221"}],"version-history":[{"count":3,"href":"https:\/\/globaleasyforex.com\/blog\/wp-json\/wp\/v2\/posts\/2221\/revisions"}],"predecessor-version":[{"id":4325,"href":"https:\/\/globaleasyforex.com\/blog\/wp-json\/wp\/v2\/posts\/2221\/revisions\/4325"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/globaleasyforex.com\/blog\/wp-json\/wp\/v2\/media\/1677"}],"wp:attachment":[{"href":"https:\/\/globaleasyforex.com\/blog\/wp-json\/wp\/v2\/media?parent=2221"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/globaleasyforex.com\/blog\/wp-json\/wp\/v2\/categories?post=2221"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/globaleasyforex.com\/blog\/wp-json\/wp\/v2\/tags?post=2221"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}