Overheated Economy

Filed Under » , ,
Dictionary Says

Definition of 'Overheated Economy'

When a prolonged period of good economic growth and activity causes high levels of inflation (from increased consumer wealth) and inefficient supply allocations as producers overproduce and create excess production capacity in an attempt to capitalize on the high levels of wealth. Unfortunately, these inefficiencies and inflation will eventually hinder the economy's growth and cause a recession. 
Investopedia Says

Investopedia explains 'Overheated Economy'

Rising rates of inflation are typically one of the first signs that an economy is overheating. As a result, governments and central banks will usually raise interest rates in an attempt to lower the amount of spending and borrowing.

Between June 2004 and June 2006, the Federal Reserve Board increased the interest rate 17 times as a gradual means of slowing America's overheated economy.

Related Definitions

Search results for

'Overheated Economy'

  • 4 Stocks For An Overheated Market

    http://stocks.investopedia.com/stock-analysis/2009/4-Stocks-For-An-Overheated-Market-SGA-AMED-TU-VZ-BCE1015.aspx
    ... 4 Stocks For An Overheated Market. ... With an aging population wanting to continue to
    live in their homes, it's likely that once the economy improves, hiring ...

  • Macroeconomics: Money And Banking | Investopedia

    http://www.investopedia.com/university/macroeconomics/macroeconomics4.asp
    ... policy can be used to influence aggregate demand, lessening the severity or length
    of recessions and slowing growth before an economy becomes overheated. ...

  • Buffett's Take On The Credit Crisis

    http://stocks.investopedia.com/stock-analysis/2010/Warren-Buffetts-Take-On-The-Ratings-Agencies-BRK-MCO-MHP-WFC-BAC-GS0603.aspx
    ... in a position to know that housing prices were at an absolute level that made little
    sense, and that the pace of growth was overheated for an economy the size ...

  • How Economic Reality Influences The Market

    http://www.investopedia.com/articles/economics/10/economic-reality-the-market.asp
    ... Wackiest Stock Indicators.); Investor Psychology People may plunge into overheated
    markets, which are ... up to levels that are not justified by the real economy. ...

  • Economic Meltdowns: Let Them Burn Or Stamp Them Out?

    http://www.investopedia.com/articles/economics/08/speculative-bubble.asp
    ... he has long maintained that bubbles are an unavoidable feature of a dynamic economy. ...
    and relaxed lending by financial institutions created an overheated market ...

  • Harley-Davidson Looking A Little Over-Revved

    http://stocks.investopedia.com/stock-analysis/2011/Harley-Davidson-Looking-A-Little-Over-Revved-HOG-THO-WGO-PII-CCL-RCL-MTN-HMC0722.aspx
    ... big improvement in the consumer spending environment, Harley-Davidson shares look
    overheated. ... The economy has certainly passed the worst of the recession, but ...

  • The Myth About Market Bubbles

    http://www.investopedia.com/articles/economics/10/the-myth-about-bubbles.asp
    ... May 25 2010 | Filed Under ยป Bear Market, Bull Market, Economics, Economy. At various ...
    In the simplest terms, a bubble is an overheated market in which there are ...

  • Top 10 Asian Cities For Real Estate Investment - Investopedia.com

    http://financialedge.investopedia.com/financial-edge/1011/Top-10-Asian-Cities-For-Real-Estate-Investment.aspx
    ... drawback is the extreme role that exports play in the economy: they made ... Governments
    have an incentive to keep real estate from becoming overheated and leading ...

  • 5 Could-Be Bubbles Waiting To Burst - Investopedia.com

    http://financialedge.investopedia.com/financial-edge/1010/5-Could-Be-Bubbles-Waiting-To-Burst.aspx
    ... While the ubiquity of fear in the market seems to justify a lot of the enthusiasm
    for gold, it is hard to see how prices are not overheated - to say nothing of ...

  • 5 Investments That Are Better Than Oil - Investopedia.com

    http://financialedge.investopedia.com/financial-edge/0111/5-Investments-That-Are-Better-Than-Oil.aspx
    ... also capped. Given the characteristics of convertible bonds, they can be
    appealing when the stock market gets overheated. They can ...

Related Articles

Trading Center
Partner Links