FIRE Economy

AAA

DEFINITION of 'FIRE Economy '

A sector of the economy composed of finance, insurance and real estate - hence the acronym, FIRE. Businesses that make up the FIRE economy include banks and credit unions, credit card companies, insurance agencies, mortgage brokers, investment brokerages, real estate agencies, hedge funds and more. The FIRE economy is a major contributor to the overall U.S. economy.

INVESTOPEDIA EXPLAINS 'FIRE Economy '

The FIRE economy has grown significantly since the 1980s and has accompanied the decline of the U.S. manufacturing sector. It generates revenue largely through rising asset prices and interest on debt. When asset prices suffer, as they did during the housing bubble and financial crisis of 2008, the FIRE economy suffers. When the FIRE economy suffers, the rest of the economy can experience debt defaults, failed businesses, increasing unemployment, reduced demand and debt deflation. The ripple effect that the FIRE economy’s decline had on the rest of the economy illustrated how important the finance, real estate and insurance sector has become. Even non-FIRE businesses had difficulty continuing operations because of limited access to credit and reduced consumer demand.

The FIRE acronym has been used since at least 1982, when it was printed in a Washington Post newspaper article describing job growth in New York City. Within the United States, the FIRE economy is particularly important in New York City, where many financial companies are based. 

The FIRE acronym was also used in a U.S. Census Bureau classification system first employed in 1992 for the economic census, which collects data on the structure and functioning of the U.S. economy. The economic census classified as part of the FIRE economy depository institutions; nondepository credit institutions; insurance carriers, agents and brokers; real estate businesses; holding and investment offices; and security and commodity brokers, dealers, exchanges and services. 

 

RELATED TERMS
  1. Exempt Employee

    The term “Exempt Employee” refers to a category of employees ...
  2. Non-exempt Employee

    The term “Non-exempt Employee” refers to a category of employees ...
  3. All-in-on (AIO) PC

    All-in-one PCs (AIO PCs) are desktop computers which integrate ...
  4. Analog-to-digital Converter

    Analog-to-digital converters (ADCs) are used in electronic devices ...
  5. ActiveX

    ActiveX is software that allows applications to share information ...
  6. Aaron's Law

    Aaron’s Law is a bill introduced in Congress in 2013 to reform ...
Related Articles
  1. Retirement

    Find An IRA Account With No Minimum Deposit

    Three ways to start saving for retirement with a Roth or traditional IRA, no matter how little you have to invest.
  2. Options & Futures

    5 Secrets You Didn't Know About Roth IRAs

    Between its generous tax benefits at retirement and no required minimum distributions, a Roth IRA is well worth considering if you're eligible to have one.
  3. Personal Finance

    How Much Will It Cost To Study Abroad In The U.K.?

    The most popular destination for U.S. students studying abroad has a lot to offer – and ways to make it affordable.
  4. Personal Finance

    Hotel or Airbnb: Which Is Better For Paris Visit?

    Paris hotels have their allure, but a less expensive Airbnb may be just as charming – and even leave room in your budget for a longer stay.
  5. Investing

    What You Should Know About Net Neutrality

    On February 26, 2015 the FCC voted that the internet is a public utility and will be held to the standards of net neutrality. But what does that mean for us?
  6. Investing

    What Lies Ahead for Apple's P/E ratio

    Recently, Apple's P/E multiple has come down to levels equal to the S&P 500. What does the future hold for the tech giant's P/E ratio?
  7. Retirement

    5 Secrets You Didn't Know About Traditional IRAs

    A traditional IRA gives you a current-year tax benefit and future years of tax savings – minus the income restrictions that limit who can have a Roth IRA.
  8. Trading Strategies

    Scalping As A Novice Trader

    Scalping, a subset of day trading used by experienced traders, involves quick moves and decision making. We offer the basics for beginner scalpers.
  9. Forex Strategies

    The 10 Riskiest Investments

    Investors seeking high returns must also be prepared for high risk. Here are ten of the riskiest investments available.
  10. Credit & Loans

    Top US Housing Market Indicators

    A quick overview of the top economic indicators to track the housing market in the US.

You May Also Like

Hot Definitions
  1. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  2. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  3. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  4. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  5. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  6. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
Trading Center