Soft Patch

AAA

DEFINITION of 'Soft Patch'

A period of economic slowdown amid a larger trend of economic growth. This buzzword is most often used in the financial media and by the U.S. Federal Reserve to describe a period of economic weakness.

INVESTOPEDIA EXPLAINS 'Soft Patch'

This term gained popularity when former Federal Reserve Board Chairman Alan Greenspan used it in his review of the overall U.S. economy. Central banks often cut interest rates in an attempt to spur the economy through the soft patch. An example of a soft patch would be an economic slowdown due to rising commodity prices, which is believed to be short term, with the economy growing at a faster rate after the slow patch.

RELATED TERMS
  1. Financial Porn

    A slang term used to describe sensationalist reports of financial ...
  2. Alan Greenspan

    The former chairman of the Board of Governors of the Federal ...
  3. Recession

    A significant decline in activity across the economy, lasting ...
  4. Expansion

    The phase of the business cycle when the economy moves from a ...
  5. Federal Reserve Board - FRB

    The governing body of the Federal Reserve System. The seven members ...
  6. Federal Reserve System - FRS

    The central bank of the United States. The Fed, as it is commonly ...
RELATED FAQS
  1. What causes a recession?

    According to the National Bureau of Economic Research (NBER), recession is defined as "a significant decline in economic ... Read Full Answer >>
  2. For what purpose is the consumer surplus figure used?

    The consumer surplus figure is used by companies that seek to maximize revenue and profits by minimizing consumer surplus, ... Read Full Answer >>
  3. How do open market operations affect the money supply of an economy?

    The open market operations conducted by the Federal Reserve affect the money supply of an economy through the buying and ... Read Full Answer >>
  4. Why are economists interested in the consumer surplus?

    Economists are interested in consumer surplus because it measures economic welfare, plays a large part in changing market ... Read Full Answer >>
  5. What does it mean when I get a Fed margin call?

    Understanding fed margin calls and how they affect your trading account is part of investing basics. A margin account allows ... Read Full Answer >>
  6. How can individuals or businesses handle transaction costs for economic externalities?

    Externalities, also known as external economies, and transaction costs are two significant and evolving issues in contemporary ... Read Full Answer >>
Related Articles
  1. Economics

    The Federal Reserve

    Few organizations can move the market like the Federal Reserve. As an investor, it's important to understand exactly what the Fed does and how it influences the economy.
  2. Investing Basics

    Adapt To A Bear Market

    Learn how your portfolio should evolve to suit bear market conditions.
  3. Investing

    The Ups And Downs Of Investing In Cyclical Stocks

    This strategy can be profitable but only if you know when to dump these stocks.
  4. Personal Finance

    How The Federal Reserve Manages Money Supply

    Find out how the Fed manages bank reserves and this contributes to a stable economy.
  5. Economics

    Explaining Economies of Scope

    Economies of scope is a theory that says that an increase in the variety of goods produced results in a decrease in the average cost of production.
  6. Fundamental Analysis

    What is a Representative Sample?

    In statistics, a representative sample accurately represents the make-up of various subgroups in an entire data pool.
  7. Economics

    What is an Economic Dove?

    Dove is an economic term describing an economic monetary adviser who favors keeping interest rates low because it stimulates the economy.
  8. Economics

    Understanding Delivery Duty Unpaid (DDU)

    Delivery duty unpaid (DDU) is a legal and international shipping term.
  9. Investing

    Why To Look For Opportunities Overseas

    While U.S. equities can continue to climb and post further gains before the end of the year, the best opportunities may still reside outside the country.
  10. Investing

    Do Record Stock Highs Signal A Top?

    Despite higher rates, U.S. stocks have been posting new records in recent weeks, despite investor concerns about slowing U.S. corporate profit growth.

You May Also Like

Hot Definitions
  1. Fracking

    A slang term for hydraulic fracturing. Fracking refers to the procedure of creating fractures in rocks and rock formations ...
  2. Mixed Economic System

    An economic system that features characteristics of both capitalism and socialism.
  3. Net Worth

    The amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure ...
  4. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  5. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  6. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
Trading Center