Economic boom

Written by Fmi.Online Friday January 6, 2023
An economic boom is a period of outstanding economic growth or expansion. This term usually applies to a phase when output increases significantly with positive consequences in employment and prosperity.

Explanation :

The term economic boom generally refers to countries or regions enjoying positive overall performance. It is seen as a phase of optimism, confidence and development. For example, there was a boom in the United States during the 1920s when the Gross National Product grew 40% from 1921 to 1924. There are several conditions that might trigger economic booms, such as consumer and investor confidence and technological advances. In the example mentioned above, higher productivity in the automobile industry thanks to the Ford Company was a key driver for expansion in other industries. In general, these favorable periods bring better living conditions for most of the population. As demand for most products and services increase, loans and credits commonly grow. Firms expand production and hire additional employees. That increasing demand for workers tends to push wages up. However, it is also common that inflation rises as a result of higher demand and the less affluent population groups face difficulties to afford basic goods and services.

In a nutshell :

  • A boom illustrates a period of elevated or increased growth within a business, market, industry, or economy.
  • A boom lasts over the medium- to long-term and can turn into a bubble, ultimately leading to a bust.
  • Booms are often considered bull markets in the stock market, while busts are considered bear markets.
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