Procyclic

What is 'Procyclic'

Procyclic is a condition of positive correlation between the value of a good, a service or an economic indicator and the overall state of the economy. In other words, the value of the good, service or indicator tends to move in the same direction as the economy, growing when the economy grows and declining when the economy declines.

BREAKING DOWN 'Procyclic'

Some examples of procyclic economic indicators are GDP, labor and marginal cost. Most consumer goods are also considered procyclic, because consumers tend to buy more discretionary goods when the economy is in good shape.

Economic indicators can have one of three different relationships to the economy: procyclic, countercyclic (indicator and economy move in opposite directions) or acyclic (indicator has no relation to the health of the economy).