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Economic data from the USA on capacity utilization , employment rate and unemployment rate

The economy is understood to mean the overall economic situation , especially with regard to its current positive or negative trend, but the expression is also used for a particularly good overall economic situation (boom), i.e. when most companies have a large turnover . In economic terms, economic activity means fluctuations in the degree of utilization of the production potential of an economy. Furthermore, there can be more or less regular fluctuations in economic variables such as B. production , employment , interest rate and prices with the consequence that cyclical fluctuations in macroeconomic activity can arise. This can be measured by the degree of capacity utilization . The most important indicator for this is real gross domestic product .

The term "business cycle" is more precisely understood when fluctuations in demand and production lead to changes in the degree of utilization of the production capacities (in contrast to the development of capacities in the sense of economic growth itself) and if they show a certain regularity (in contrast to one-off special influences ).

This wave-like mode of change in the level of economic activity within a market economy , which recurs in business cycles, is examined and attempted to explain by business theory. Different methods are used to derive the regular pattern of an economic cycle from the observed data, in particular its upper and lower turning point.

In contrast, growth theory looks at the long-term trend of equilibrium growth in an economy . In order to look at the economic development in and of itself, it is therefore necessary to abstract from the underlying growth trend. The business cycle analysis partly overlaps with employment theory .

A distinction is often made as the individual phases of an economic cycle:

  • Upswing phases ( expansion , prosperity ),
  • Boom,
  • Downturns (recession) and
  • Depression (depression).

Depending on the underlying theory, available indicators and the relevant bodies for the individual economies, however, there are different definitions of what constitutes a “recession” and, accordingly, when it occurred.

If the economy improves in certain sub-areas of an economy due to an extraordinary situation - for example a change in the legal framework - for a limited period of time, one speaks of a special economy .

Economic policy measures to mitigate economic fluctuations are called economic policy.

Economic fluctuations

The following types of economic fluctuations can be distinguished based on the length of the cycles:

  • Seasonal fluctuations are short-term (around three months) and relatively easy to predict. Often they are caused by the seasonally changing weather conditions and are particularly noticeable in certain branches of industry that are particularly subject to these special influences, such as the construction industry .
  • Economic fluctuations are of a medium-term nature (around four years or less). They are more difficult to get to grips with and are the typical job of economic policy. They come about through imbalances between aggregate demand and aggregate supply , which are also influenced by delays in adjustment.
  • Structural fluctuations ( Kondratiev cycles ) are of a long-term nature (around 50 to 60 years). They are triggered by profound changes in the economy ( innovations in key technologies) and have a major impact on the labor market . Politics can hardly intervene here.

Length of cycles

Several economic researchers have independently identified fluctuations of different lengths. The Kitchin cycle is used to assess the business production and sales planning and warehousing . In the first phase, more is produced than sold to fill the warehouse. As soon as slower growth becomes apparent, production is cut back in the second phase. A length of 3 to 4 years can be empirically proven for this cycle . The Juglar cycle describes investment phases. It lasts between 6 and 10 years. The trigger for the Kondratiev cycle with a duration of 40 to 50 years are technological innovations.

The period of time that is ascribed to an economic cycle depends essentially on whether one uses the level of economic activity (usually measured in terms of overall economic production, i.e. the gross domestic product) as a benchmark, or the growth rates . If one delimits the beginning and end of an economic cycle according to whether economic output has declined in absolute terms (“classic economic cycles”), one finds longer cycles. A classification based on growth rates leads to a larger number of shorter "growth cycles". Alternatively, economic cycles can be measured by how much the production capacity of the company are busy. Fluctuations between around 70% (recession) and 100% (boom) are conceivable here. Accordingly, the economic definition of the economy, according to common doctrine, is: fluctuations in the degree of utilization of the production potential of an economy . A macro cycle of several years to decades is described as well as included micro cycles of a few years, but not seasonal cycles during the year.

Phases of the cycle

Business cycle (theory). Recession = downturn; Depression = economic downturn
Theoretical business cycle in the business cycle clock , as z. B. is used within the framework of the ifo business climate index. (Deviatingly, the Ifo describes the economic low as a recession.)

Business cycles are divided into several phases by various researchers and institutions. A two-phase scheme is widespread, in which the business cycle is divided into an upswing and a downturn. The upswing phases usually take up by far the largest part of the cycle, while downswing phases are generally quite short. This scheme is very common , especially in the USA . The upswings there lasted an average of 57 months between 1945 and 2001, whereas the downswings only lasted 10 months. The last, rather weak expansion phase in the USA is assigned to the years 2001 to 2007 in an EPI paper .

Expansive phase (upswing, prosperity)

The phase of economic upswing is called the expansionary phase. It is characterized by rising order backlogs and productions , falling unemployment rates , a tendency to perceive but still small price increases ( inflation ), low interest rates with a rising tendency and optimistic forecasts for economic development.

It is also characterized by improved capacity utilization, increasing private investments and wages, increasing national income and increased private consumption .


In the boom phase (upper turning point phase, boom), the capacities of an economy are fully utilized due to strong demand. There is full employment . The wage level is rising, prices and interest rates continue to rise, an increase in real national income is no longer possible. Production is increased until the market overheats - when rising interest rates due to increased credit demand and increased bad investments due to overly optimistic expectations cause problems for more and more companies. One speaks here of market saturation . Features of a saturated market are:

From now on, the gross domestic product will continue to increase, but with falling growth rates. The phase of downturn has begun.

Recession (downturn)

Recession describes the contractive economic phase in which an economic downturn is recorded. According to the most common definition, a recession is when the economy does not grow in two consecutive quarters compared to the previous quarters or when there is a decline (falling gross domestic product). According to this definition, Japan has so far managed the longest phase without a recession of all OECD countries (132 quarters). The longest running series in 2017 was Australia with 102 quarters.

In the United States observed Business Cycle Dating Committee of the National Bureau of Economic Research , the statistical data on the economic development, which is not, however, always uses the same metrics. Depending on the quality of the data, different indicators are assigned the ability to accurately depict the level of economic activity; so in 2007/2008 in particular the employment figures that were collected from companies. A recession phase is determined from the top vertex to the bottom.

According to the Council of Economic Experts' criterion , a recession is present when a decrease in the relative output gap by at least two thirds of the respective potential growth rate is accompanied by a currently negative output gap.

According to the Institute for Economic Research (WIFO) in Austria , a decline in growth rates in two consecutive quarters (always compared to the same period in the previous year) cannot be described as a recession, but only when there are two quarters of negative growth. So only a shrinking economy is in a recession, but not an economy that is only growing slightly.

A recession phase is generally characterized by:

  • Economic boom slows down
  • pessimistic forecasts for the economic situation
  • Decline in demand
  • overcrowded warehouse
  • Reduction of overtime and the start of short-time work
  • Dismissal of workers who are on probation and non-renewal of fixed-term contracts
  • lack of investment
  • partial shutdown of production facilities
  • stagnating or falling prices, wages and interest
  • falling stock exchange prices

While for Joseph Schumpeter the upswing phase has to do with the introduction of an innovation of key economic importance, for him the recession phase is the “harvest time”, when the results of the investments made during the innovation phase are brought in. Compared to the exaggerations of the boom phase, the economy is generally becoming “more sensible” again. Some companies that are no longer viable under the new technological conditions are disappearing from the market.

If the downturn continues or if there is persistent stagnation, one speaks of depression .

Depression (economic downturn)

An economic trough is the trough an economy falls into as a result of a downturn. If the economy persists in this low for an unusually long period of time and further downward movements cannot be ruled out, the term depression (Latin: deprimere = 'to depress') is used.

It is sometimes assumed that there is “no academic definition” of “depression”. Thorstein Veblen, for example, had already decided in 1904 on his theory of the cycles of business activities with a theory of growth that essentially described chronic tendencies to persist in depression. In 1939 Joseph A. Schumpeter distinguished between “depression” and “recession” by the fact that recession in the course of the capitalist economy was, as it were, a normal process that restores equilibrium. In the Depression, on the other hand, “abnormal liquidation ” leads to the destruction of many things that would simply continue to exist without them. While abolishing the recession would be tantamount to abolishing the capitalist process as a whole, the depression is a particular economic emergency that makes state intervention almost inevitable. In a similar sense, Paul Krugman speaks of “ depression economics ” in terms of the essential difference to the current economic policy .

An economic downturn is often exacerbated by the break-up of structural crises , such as overcapacities in individual branches of industry. For a long time, all economic activity (as indicated by gross domestic product) declines, stock market prices fall, unemployment rises sharply, and tendencies towards deflation arise (the price level falls, and consumer prices fall).

The term "depression" was for the world economic crisis at the end of the 1920s used (US English: Great Depression ). This depression was marked by mass unemployment of a previously unknown extent. The collapse of the stock exchanges on so-called Black Friday , October 25, 1929, is seen as the beginning of the global economic crisis of that time . The international economic crises in the last quarter of the 19th century were also referred to as the Great and Long Depression . On March 31, 2009, a hearing with well-known economists took place in front of the US Senate Committee on the question of what can be learned from global economic crises.

From a social psychological point of view, the reason for depression is often the loss of confidence in the functioning of the economy. Joseph Schumpeter regards this as a pseudo-explanation and warns against viewing psychological expectations as exogenous variables , i.e. real external conditions. The fear of losing one's job, and with it the income that it will secure , leads to a reduction in consumer spending, the fall of which in turn leads to more job losses. Other attempts at explanation blame bad economic policy decisions (in the case of the global economic crisis, for example, a high degree of protectionism and inadequate measures to reduce the effects of price losses on important markets) or other factors such as herd instinct among investors and / or exogenous influences.

Business Theories

The economic phenomenon can be approached from different perspectives:

  • A phenomenological view deals with the business cycle as such. It tries to draw lessons for the future course of the economy from its duration, the length of the various phases and the behavior of various sub-aggregates (such as employment, investments, exports ). This view is important insofar as it establishes business cycles as an independent research object in the first place.
  • An analytical perspective tries to explain the occurrence of business cycle fluctuations through approaches from economic theory. One starting point is accelerator - multiplier approaches ( multiplier-accelerator model ). Other attempts at explanation place storage cycles at the center of the explanation. Financial or monetary policy measures are also analyzed as triggers for economic fluctuations ; political cycles are also discussed, as well as psychological and other causes. Still other explanatory approaches use predator-prey models of population dynamics to explain business cycle fluctuations with the help of Lotka-Volterra equations .
  • An exogenous ( non-economic ) perspective looks at the factors that are not directly related to the economy. For example, wars , natural disasters , pandemics , discoveries , inventions and new sources of raw materials are factors that can change the economy.

The different schools of economics favor different explanations. These different views are reflected in the economic policy recommendations.

Economic research and forecast


Using methodically controlled empirical procedures, one tries to diagnose and predict the cyclical development of a specific economy. This type of business cycle research can thus be distinguished from the theoretical analysis of the business cycle.

Research institutions

In the USA, economic research was founded by Arthur F. Burns and Wesley Clair Mitchell . Developed by them in the 1920 Harvard indicator fell into disrepute when he the global economic crisis in 1929 did not indicate. Business cycle research only revived in the 1930s.

In Germany , Arthur Spiethoff and Ernst Wagemann , among others, were the pioneers. In a real sense, business cycle research began with the establishment of the Institute for Business Cycle Research in Berlin (today: German Institute for Economic Research , DIW). In addition, several other economic research institutes have established themselves in Germany , which regularly publish economic forecasts.

Since 1950, they have been preparing a joint diagnosis twice a year on behalf of the Federal Government . The joint forecast has been publicly tendered since 2007 so that other institutes can also participate. The DIW, as a pioneer, was ruled out because the federal government had reservations about the efficiency of the institute due to the departure of experienced employees from the DIW.

The council of experts founded in 1963 to assess macroeconomic developments , also on behalf of the federal government, prepares an economic forecast once a year, which is always published in November.

International organizations publish further regular forecasts. In its OECD Economic Outlook, the OECD publishes an economic forecast for all of its member countries and the major emerging economies twice a year. The EU Commission and the IMF also publish regular economic forecasts.

In Germany, the employers' research institutes ( Institut der Deutschen Wirtschaft ) and the trade unions (since 2005 the newly established Institute for Macroeconomics and Business Cycle Research (IMK) in the Hans-Böckler-Foundation ) deal with business cycle analyzes. The Institute for Employment Research of the Federal Employment Agency analyzes the effects of economic developments on the labor market.

The reliability of the forecasts made over the last ten years is only slightly better than the quality of a “naive” forecast. The predicted values ​​of the experts examined diverge considerably; everywhere, however, the level of future growth tends to be overestimated.

Methods of economic forecasting

Economic forecasts are derived from past experience of the course of previous economic cycles, empirically determined economic relationships (e.g. the effect of interest rates on investments or taxes on consumer demand) and, finally, economic indicators .

The national accounts provide the defining framework for establishing the consistency of the forecasts. In doing so, one uses partly intuitive procedures, partly econometric methods. Econometric models of the business cycle are based on mathematical - statistical methods; however, additional information can flow into the models, the so-called adds (constant additive), or also multiplicative changes in the endogenous variables. For example, new political measures have to be incorporated into the model structure “by hand”; the model can then calculate the effects on its own.

Economic barometer

Every month the German Institute for Economic Research (DIW) publishes a DIW economic barometer . It estimates what the real gross domestic product of the quarter just ended could look like; because at this point in time no data are available from the Federal Statistical Office . It relies on such indicators as production and sales in major industries; including wholesale sales and incoming orders, revenue from sales tax and also vehicle registrations .

Once a month the Ifo Institute asks the following question: “Will business get better, worse or do business just as well in the next six months?” An indicator for the development of the economy is calculated from the 7,000 responses.

For its ZEW Index 350, the Center for European Economic Research (ZEW) asks selected stock exchange experts about their economic expectations.

“Both ifo business expectations and ZEW economic expectations show a significant lead over the annual rate of change in industrial production in Germany. For the ZEW economic expectations, this is up to 6 months, while the Ifo expectations have a lead time of a maximum of 4 months. In addition, show Granger - causality tests that the ZEW indicator has a significant lead time of one month before the Ifo indicator ".

Thomas Fricke , on the other hand, points out the qualitatively different approach to the measurement methods used by the Ifo Institute and ZEW : “One of the basic problems of the ZEW Index is obviously to interview analysts who tend to have strong herd instincts - and then also to the general situation in the country (and not as with the Ifo on the location of one's own company). "

Economic diagnosis

The current state of an economy is determined by various methods. On the one hand, a time series analysis can be carried out, whereby certain macroeconomic parameters such as gross domestic product, national income, consumption and investment are used. Should a differentiated economic diagnosis take place, a large number of further time series such as B. the incoming orders are used.

Incoming orders in German industry since 1952

Various short-term indicators can be constructed through the time series analysis. Numerous companies can also be questioned about the current economic situation. In the Federal Republic of Germany, such surveys are carried out by the Ifo Institute for Economic Research on the one hand through the business cycle test and through a trend survey. In addition, a comparison of production potential and actual production can take place. By means of this comparison, the cyclical state of an economy is derived from the degree of utilization.

Economic Service

This is a periodic report with the aim of evaluating the results and data of business cycle research and making them usable for the individual economic actors. To serve z. B. the following publications: the Ifo Schnelldienst of the Ifo Institute for Economic Research in Munich; that of the iwd, the Institut der Deutschen Wirtschaft in Cologne and a number of other economic research institutes.

Business cycles in Germany

In contrast to the USA, where there is an “official” dating of business cycles, there is no official classification of the cycles for Germany. If one only looks at economic cycles in the narrower sense, which are limited by absolute declines in economic output, six full cycles can be identified since 1945, which mostly coincided with slowdowns in the world economy.

German business cycles based on GDP
  • The first post-war upswing ended in the second half of 1966. The gross domestic product (GDP) in 1967 was 0.2% lower than the GDP in 1966. The world economy also cooled (low phase in the second half of 1967).
  • The second cycle ended with the 1974 recession, when a lot of money flowed to the oil-producing countries during the first oil price crisis .
  • A third cycle ended in 1981/82 during the second oil price crisis.
  • The fourth cycle ended in recession in 1993. It was the only recession in the history of the Federal Republic of Germany that had domestic economic causes: in the reunification boom there had been excesses; the Deutsche Bundesbank had u. a. practiced a restrictive monetary policy because of the previously high inflation.
  • A fifth cycle ended after this count in 2001. In March 2000 the dot-com bubble burst; this ended a boom in the IT and communications industry. The weak phase lasted until around 2004.
  • The relatively strong economic growth since 2005 heralded the beginning of the sixth cycle in Germany. This ended abruptly in the second half of 2008 due to a financial and economic crisis in many industrialized countries . In 2009, German gross domestic product (GDP) fell by 5% after adjustment for price. That was the biggest decline in post-war history.

Business cycles in Switzerland

After the war, Switzerland , unscathed by World War II , experienced an upswing that lasted until the oil crisis at the beginning of the 1970s, mainly supported by exports, which in its final phase resulted in inflation and was abruptly stopped by the oil crisis and a construction crisis. In the second cycle, the upswing spanned the 1980s in particular; it was halted in the early 1990s by a burst bubble in the real estate sector. The renewed upswing from the second half of the 1990s came to an end, as in Germany, with the bursting of the dot-com bubble in the American IT sector. The fourth cycle upswing was finally interrupted by the banking and financial crisis of 2008 . After overcoming this economic downturn, growth in Switzerland is now back on a high level.

See also


The phenomenon of the business cycle is discussed in all major macroeconomic textbooks, for example:

  • Lutz Arnold: Macroeconomics . Mohr Siebeck, Tübingen 2008, ISBN 978-3-16-148075-1 .
  • Olivier Blanchard, Gerhard Illing: Macroeconomics . 4th updated edition. Pearson Studies, 2006, ISBN 3-8273-7209-7 .
  • Michael C. Burda, Charles Wyplosz: Macroeconomics. A European perspective. 2nd Edition. Vahlen, Munich 2003, ISBN 3-8006-2856-2 .
  • N. Gregory Mankiw: Macroeconomics. 5th edition. Schäffer-Poeschel, 2003, ISBN 3-7910-2026-9 .

The following textbooks deal specifically with the economy:

  • Lutz G. Arnold: Business cycle theory . Oxford University Press, Oxford 2002, ISBN 0-19-925682-9 .
  • Bernd Lucke : Theory and empirical evidence of real business cycles. With 73 tables (= Studies in contemporary economics ). Physica-Verlag, Heidelberg 1998, ISBN 3-7908-1148-3 (= at the same time habilitation, FU Berlin, 1997: Contributions to the theory and empiricism of real business cycles ).
  • Alfred Maußner: Business cycle theory . Springer, Berlin 1994, ISBN 3-540-57790-4 .
  • Gunther Tichy: Economy. Stylized facts, theory, forecast. 2nd Edition. Springer, Berlin 2007, ISBN 978-3-540-57437-8 .

Web links

Wiktionary: conjuncture  - explanations of meanings, word origins, synonyms, translations

Individual evidence

  1. Business in Duden online; from there also the etymology Latin coniunctura 'connection', in the sense of 'situation resulting from the connection of different phenomena', to Latin coniungere 'connect'.
  2. Andrey Korotayev , Sergey V. Tsirel: A Spectral Analysis of World GDP Dynamics: Kondratiev Waves, Kuznets Swings, Juglar and Kitchin Cycles in Global Economic Development, and the 2008-2009 Economic Crisis. In: Structure and Dynamics . Vol. 4, No. 1, 2010, pp. 3-57.
  3. ^ A b Lothar Wildmann: Economic Policy. Oldenbourg Wissenschaftsverlag, 2007, ISBN 978-3-486-58197-3 , p. 83.
  4. ^ Lothar Wildmann: Economic Policy. Oldenbourg Wissenschaftsverlag, 2007, ISBN 978-3-486-58197-3 , pp. 83, 84.
  5. ^ US Business Cycle Expansions and Contractions
  6. Current EPI figures on GDP ( Memento from September 20, 2012 in the Internet Archive )
  7. World ranking list of recession avoiders: An impressive record hunt continues . In: Makronom . March 1, 2017 ( [accessed March 1, 2017]).
  8. Determination of the December 2007 Peak in Economic Activity ( Memento of December 18, 2008 in the Internet Archive ) (PDF file; 29 kB)
  9. Expert report 2008 ( Memento from March 6, 2009 in the Internet Archive )
  10. ^ Joseph A. Schumpeter: Business cycles. A theoretical, historical and statistical analysis of the capitalist process. Volume 1, Göttingen 1961 (English Business Cycles. A Theoretical, Historical, and Statistical Analysis of the Capitalist Process. New York 1939), p. 152.
  11. "… economists are using the word depression - a subjective term with no academic definition - to describe a condition of broad and extreme economic distress that remains stubbornly in place for much longer than a typical downturn." (Peter S. Goodman: Sharper Downturn Clouds Obama Spending Plans. In: The New York Times. February 27, 2009)
  12. ^ Douglas Dowd: Introduction to the Transaction Edition. In: Thorstein Veblen: The Theory of Business Enterprise . Transaction Books, New Brunswick. NJ, ISBN 0-87855-699-0 . P. Xvi.
  13. ^ Joseph A. Schumpeter: Business cycles. A theoretical, historical and statistical analysis of the capitalist process. First volume, Vandenhoeck & Ruprecht, Göttingen 2008, ISBN 978-3-525-13237-1 , pp. 152, 158 f.
  14. ^ "When depression economics prevails, the usual rules of economic policy no longer apply: virtue becomes vice, caution is risky and prudence is folly." (Paul Krugman: Depression Economics Returns. New York Times, November 14, 2008)
  15. ^ Lessons from the New Deal .
  16. ^ Joseph A. Schumpeter: Business cycles. A theoretical, historical and statistical analysis of the capitalist process. First volume, Vandenhoeck & Ruprecht: Göttingen 2008, ISBN 978-3-525-13237-1 , p. 150, p. 152, 158 f.
  17. The Goodwin model for explaining business cycle fluctuations is based on Lotka-Volterra equations, with the wage share playing the role of predator and the employment share playing the role of prey.
  18. Gerold Blümle (1989): Growth and Economy with Differential Profits - A Schumpeter Model of Economic Development , in: HJ Ramser and Hajo Riese (eds.) Contributions to applied economic research , Gottfried Bombach on his 70th birthday. Berlin pp. 13–37. Also shown in Frank Schohl : The market-theoretical explanation of the economy. (= Writings on applied economic research). Tübingen 1999.
  19. Wolfgang Weidlich , Günther Haag : Concepts and Models of a Quantitative Sociology - The dynamics of Interacting Populations. Berlin / Heidelberg / New York 1983. There chapter 5: "Non-Equilibrium Theory of Investment: 'The Schumpeter Clock'"
  20. FTD: DIW threatens to be excluded from the joint diagnosis, June 25, 2007 ( Memento of January 12, 2012 in the Internet Archive )
  21. ^ Steffen Osterloh: Accuracy and Properties of German Business Cycle Forecasts. Applied Economics Quarterly 54/1 (2008)
  22. ZEW Economic Report: ZEW Forecast Quality - Economic Expectations in Comparison , March 2001.
  23. For a Ministry of silly indicators ( Memento from February 21, 2009 in the Internet Archive ) February 17, 2009.
  24. ^ Otmar Emminger : D-Mark, dollar, currency crises. Memoirs of a former Bundesbank President , 1986, p. 137 ff.
  25. Federal Statistical Office: Time series on gross domestic product for Germany .
  26. Ulrich Im Hof : History of Switzerland . Kohlhammer, 2001, ISBN 3-17-017051-1 .
  27. ^ Bulletin SKA of Switzerland. Kreditanstalt, 6/1996.
  28. ↑ Management report from mid-2014 on the Swiss economy .