Investopedia

Contraction

Filed Under »
Dictionary Says

Definition of 'Contraction'

A phase of the business cycle in which the economy as a whole is in decline. More specifically, contraction occurs after the business cycle peaks, but before it becomes a trough. According to most economists, a contraction is said to occur when a country's real GDP has declined for two or more consecutive quarters.
Investopedia Says

Investopedia explains 'Contraction'

For most people, a contraction in the economy can be source of economic hardship; as the economy plunges into a contraction, people start losing their jobs. While no economic contraction lasts forever, it is very difficult to assess just how long a downtrend will continue before it reverses because history has shown that a contraction can last for many years (such as during the Great Depression).

Articles Of Interest

  1. Recession: What Does It Mean To Investors?

    Understanding the business cycle and your own investment style can help you cope with an economic decline.
  2. Peak-and-Trough Analysis

    Prices never move in straight lines, so it's time to learn about this powerful trend-following technique.
  3. Why The Consumer Price Index Is Controversial

    Find out why economists are torn about how to calculate inflation.
  4. Inspecting A Country's Debt

    Tensions over just how to handle debt are pitting the rich world against the developing world like never before.
  5. U.S. Vs. China: Battle To Be The Largest Economy In The World

    America's lengthy title reign as "World's Largest Economy" is fast under threat by China's surging economic growth. Find out what the global rankings are forecasted to be for these economic powerhouses. ...
  6. Countries With The Fastest And Slowest GDP Growth

    Discover which countries have shown the most growth since 1980, and which have shown the more ignominious fizzle and pop.
  7. Is Your Stock Headed South?

    Don't let your portfolio go with it! Find out which signs to watch out for.
  8. Developing Nations With The Most Debt

    These emerging markets have the most debt of any others. How does this affect the world economy?
  9. Don't Ignore These Emerging Markets

    BRIC nations aren't the only emerging markets worth investing in. Poland, Indonesia and Peru are also on the rise.
  10. How A Country's GDP Relates To Its Gold Medal Count

    Data shows that countries that are winning a smaller percentage of gold medals are seeing their share of the worldwide GDP decrease as well.
comments powered by Disqus
Marketplace
Hot Definitions
  1. Cost-Push Inflation

    A phenomenon in which the general price levels rise (inflation) due to increases in the cost of wages and raw materials.
  2. Happiness Economics

    The formal academic study of the relationship between individual satisfaction and economic issues, such as employment and wealth.
  3. Affluenza

    A social condition arising from the desire to be more wealthy, successful or to "keep up with the Joneses." Affluenza is symptomatic of a culture that holds up financial success as one of the highest achievements.
  4. Icarus Factor

    The term Icarus factor describes a situation where managers or executives initiate an overly ambitious project which then fails. Fueled by excitement for the project, the executives are unable to reign in their misguided enthusiasm before it is too late to avoid the failure.
  5. Angelina Jolie Stock Index

    An index made up of a selection of stocks from companies associated with actress Angela Jolie.
  6. Consequential Loss

    The amount of loss incurred as a result of being unable to use business property or equipment.
Trading Center