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. Noncancellable Insurance Policy

    A life or disability insurance policy that an insurance company ...
  2. Total Annual Loan Cost (TALC)

    The projected total cost that a reverse mortgage holder should ...
  3. Concurrent Periods

    A period of time in which more than one injury or disability ...
  4. Member Month

    The number of individuals participating in an insurance plan ...
  5. Premium Balance

    The amount of premium that is owed to an insurer for a policy, ...
  6. Pre-Existing Condition Exclusion ...

    A health insurance benefit provision that places limits on benefits ...
Related Articles
  1. Taxes

    What's the difference between cost of ...

  2. Bonds & Fixed Income

    What determines the price of a bond ...

  3. Credit & Loans

    What are the different types of cash ...

  4. Fundamental Analysis

    What are some examples of industries ...

Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  3. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  4. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  5. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center