Boom

What is a 'Boom'

A boom refers to a period of increased commercial activity within either a business, market, industry or economy as a whole. For an individual company, a boom means rapid and significant sales growth, while a boom for a country is marked by significant GDP growth. In the stock market, booms are associated with bull markets, whereas busts are associated with bear markets.

BREAKING DOWN 'Boom'

Stocks that suddenly become very popular and gain strong, elevated market profits are the result of a stock boom. An example of this is the internet technologies boom or "dot-com bubble" that occurred during the late '90s. This was one of the most famous booms in stock market history.

A company or industry boom results in an increase of output, jobs and investment in that industry. Certain events can be citywide or nationwide booms for business activity, such as hosting the Olympics, which translates into capital investment, TV broadcasting deals, sponsorship deals and tourism. TV broadcasting revenue alone is projected to be $4.1 billion for the 2016 Summer Olympics in Brazil.

Conversely, a downturn in a particular industry or financial sector can result in a bust for an entire city or state, especially if the region has invested too heavily in that industry or sector. Arizona and Nevada are currently mired in an economic slump because they were hit hardest by the real estate bust and resulting mortgage crisis of 2007.

The cyclical nature of the market and the economy in general suggests that every strong economic growth bull market in history has been followed by a sluggish low growth bear market.

Trending Booms and Busts in the United States

On a more aggregate level, a boom is indicated by increasing output and income, employment, prices, profit, and interest rates. Economic observers break aggregate U.S. data down state by state in order to see the amount that each state contributes to variables such as real GDP per capita and real GDP growth per capita.

The U.S. states that have experienced the highest growth in real GDP per capita from 2000 through 2015 are North Dakota, South Dakota, Oregon, Oklahoma, Nebraska, Montana, Iowa, New York, Vermont and Texas. The U.S. states with the lowest rate of real GDP growth per capita over this same period of time are Nevada, Georgia, Arizona, Delaware, South Carolina, Michigan, Idaho, Florida, Missouri and North Carolina. The first set of states are considered to be sustaining a long-term boom, whereas the second set of states are considered to be suffering a long-term bust.

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