This tag covers the analysis of business cycle phases: expansion, peak, slowdown, recession and recovery. It helps locate the economy in its temporal dynamic and anticipate coming inflections. Knowing where we stand in the cycle is fundamental to interpreting monetary policy decisions and market moves. Cycles never repeat identically, but their mechanisms remain readable.
Investment is the main engine of the economic cycle owing to its volatility and its amplifying effect on activity. Its variations precede and magnify the inflections of overall output through the accelerator mechanism.
Long-term industrial cycles shape the real economy through productive capacity, infrastructure and the deep inertias they generate. Operating across decades, they define potential growth far beyond quarterly fluctuations.
Each business cycle is shaped by a unique institutional, technological and geopolitical context. Monetary regimes, debt structures and value chains alter the mechanisms at work. Historical analogy remains a useful reasoning tool but a flawed predictive grid.
Inventory variations can account for the bulk of quarterly GDP changes while saying little about the underlying trend in final demand. The bullwhip effect propagates these adjustments along the supply chain, amplifying business cycle fluctuations beyond what real demand would justify.
Reading employment resilience as proof that the cycle remains healthy inverts the actual sequence. Hiring and firing costs, skill retention and a cascade of intermediate adjustments — overtime, short-time work, hiring freezes, voluntary departures — mean the labour market is a lagging indicator by construction. Across the last four US recessions, peak job destruction came 6 to 9 months after the official start of the contraction.
Regional cycles do not move in lockstep. Three structural channels — monetary policy, fiscal policy, productive specialization — explain why growth gaps between the US, the euro area, and Asia are widening rather than closing. Why aggregate readings of 'global conditions' increasingly miss what matters.
The output gap between actual and potential GDP structures the cycle's adjustments — but potential itself moves. A closing gap can signal accelerating activity or, just as easily, a downward revision of potential. The distinction matters for monetary and fiscal policy calibration.
Equity markets do not wait for economic data — they anticipate it. This structural timing gap — and the misinterpretations it causes — is one of the most decisive and least understood mechanisms of how financial markets operate. Markets do…
Yield-curve inversion occupies a special place among leading indicators. Yet the real mechanism linking this signal to cyclical reversals — the bank-credit channel — remains largely misunderstood. The yield curve does not predict recession — it causes it, via credit.…
The real economic cycle takes shape in investment and productivity, long before appearing in cyclical indicators. Yet most economic debate remains trapped in quarterly figures. The cycle forms in stocks, not flows. The real economic cycle describes the deep dynamics…
