Econ Basics for Owners - The Business Cycle
Business Cycles move through the economy like ocean waves and consist of a wave front - an expansion, and the back of the wave - a contraction. There are also transition periods when the wave shifts it's energy from growing to shrinking. Our first Segment will focus on Expansions and Contractions.
Topic 1: The Business Cycle
Econ Basics for Owners - Expansions and Contractions
Staying at sea the transition between expanding and contracting waves are called troughs and crests. At the end of a contraction the economy is in the trough and at its lowest point, the crest represents the economy's highest point. The other issue is understanding why troughs and crests happen - we will discuss the formation of bubbles and the corresponding inflection points in Segment Three.
Topic Two: Expansions & Contractions
Econ Basics for Owners - Inflection Points & Bubbles
Inflection points are nothing more than points in time when transitions occur from one state to another. During a Expansion there are 2 Inflection Points - the first signaling the Contraction is Over and the Second when the Bubble starts. The same is true for Contractions - the first signals the Bubble bursting and the second when negative spirits have taken over the market.
Topic 3: Inflection Points & Bubbles
Econ Basics for Owners - How to Read the Business Cycle Tea Leaves
If we start at the end of a recession / depression / contraction the indicators are prices have stabilized. Although most goods and services are undervalued, the slide has stopped. There is activity in the stock market with smart money looking for bargains. The Producer Price Index (PPI) is going up as demand starts to increase, and credit starts becoming available.
Topic 4: Reading the Tea Leaves
"The World Of Business At Your Finger Tips"
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