Economic Cycle

An Economy passes through an Economic Cycle, from peak growth to trough, the transition phases and back to the peak. There are the various phases and characteristics of each phase for a complete Cycle.

The relative strength or weakness in various Economic data points such as Unemployment, Consumer Confidence, Inflation, Industrial Production will characterise each phase of the Economic Cycle. All of these data points assist in determining which is the current stage of the Economic Cycle. For example, rising Unemployment and falling Consumer Confidence would likely indicate the contraction phase in the cycle. Different stages of an Economic Cycle will be more beneficial to some companies compared to others. Understanding the phase and rate of either growth or contraction is key in Asset Allocation and which stocks to Buy, Hold or Sell.