An economic expansion is an upturn in the level of economic activity and of the goods and services available. It is a finite period of growth, often measured by a rise in real GDP, that marks a reversal from a previous period, for example, while recovering from a recession. The explanation of fluctuations in aggregate economic activity between expansions and contractions ("booms" and "busts" within the "business cycle") is one of the primary concerns of macroeconomics.
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In this Dossier
- ⭐ Core Definition: Economic expansion
- Economic expansion in the context of Boom and bust
- Economic expansion in the context of Post–World War II economic expansion
- Economic expansion in the context of Job security
- Economic expansion in the context of 1990s economic boom
- Economic expansion in the context of Third Van Agt cabinet
Economic expansion in the context of Boom and bust
Business cycles are intervals of general expansion followed by recession in economic performance. The changes in economic activity that characterize business cycles have important implications for the welfare of the general population, government institutions, and private sector firms.
There are many definitions of a business cycle. The simplest defines recessions as two consecutive quarters of negative GDP growth. More satisfactory classifications are provided first by including more economic indicators and second by looking for more data patterns than the two quarter definition. In the United States, the National Bureau of Economic Research oversees a Business Cycle Dating Committee that defines a recession as "a significant decline in economic activity spread across the market, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales."
Economic expansion in the context of Post–World War II economic expansion
The post–World War II economic expansion, also known as the postwar economic boom or the Golden Age of Capitalism was a broad period of worldwide economic expansion beginning with the aftermath of World War II and ending with the 1973–1975 recession. The United States, the Soviet Union, Australia and Western European and East Asian countries in particular experienced unusually high and sustained growth, together with full employment.
Contrary to early predictions, this high growth also included many countries that had been devastated by the war, such as Japan (Japanese economic miracle), West Germany and Austria (Wirtschaftswunder), South Korea (Miracle on the Han River), Belgium (Belgian economic miracle), France (Trente Glorieuses), Italy (Italian economic miracle) and Greece (Greek economic miracle). Even countries that were relatively unaffected by the war such as Sweden (Record years) experienced considerable economic growth.
Economic expansion in the context of Job security
Job security is the probability that an individual will keep their job; a job with a high level of security is such that a person with the job would have a small chance of losing it. Many factors threaten job security: globalization, outsourcing, downsizing, recession, and new technology, to name a few.
Basic economic theory holds that during periods of economic expansion businesses experience increased demand, which in turn necessitates investment in more capital or labor. When businesses are experiencing growth, job confidence and security typically increase. The opposite often holds true during a recession: businesses experience reduced demand and look to downsize their workforces in the short term.
Economic expansion in the context of 1990s economic boom
The 1990s economic boom in the United States was a major economic expansion that lasted between 1993 and 2001, coinciding with the economic policies of the Clinton administration. It began following the early 1990s recession during the presidency of George H.W. Bush and ended following the infamous dot-com crash in 2000. Until July 2019, it was the longest recorded economic expansion in the history of the United States.
Economic expansion in the context of Third Van Agt cabinet
The third Van Agt cabinet was the executive branch of the Dutch Government from 29 May 1982 until 4 November 1982. The cabinet was formed by the Christian-democratic Christian Democratic Appeal (CDA) and the social-liberal Democrats 66 (D'66) after the fall of the previous Cabinet Van Agt II. The caretaker rump cabinet was a centrist coalition and had a minority in the House of Representatives with Christian Democratic Leader Dries van Agt continuing as Prime Minister and dual served as Minister of Foreign Affairs. Progressive-Liberal Leader Jan Terlouw continued as Deputy Prime Minister and Minister of Economic Affairs from previous cabinet.
The cabinet served in the early years of the economic expansion of the 1980s. Domestically its primary objective was to make preparations for a snap election in 1982, and it had to deal with a growing inflation following the recession in the 1980s and the Cent was removed as an active currency. Following the election the cabinet continued in a demissionary capacity until it was replaced by the First Lubbers cabinet.