Short-Run Economic Fluctuations
Short-run economic fluctuations are the short-term changes in economic activity. Though the term is often used interchangeably with business cycles, short-run fluctuations occur under different circumstances than business cycles. The term is usually applied to fluctuations in economic activity lasting a year or less. A cycle can be defined as a sequence of similar events, each of which is followed by a period of recovery. The distinction between a "cycle" and a "recession" is in the length of the cycle. It is the difference between the length of the recovery period and the length of the period of growth during the expansion phase of the cycle. The Great Depression of the 1930s was a period of massive economic contractions in industrialized countries. It is generally seen as beginning with the stock market crash of October 1929, and ending in the U.S. in June 1938. From 1929 to 1938, the U.S. and most of the rest of the world went through a period of very high unemployment and high inflation. At the end of the recession, the economy started to grow again. The downturn in economic activity in and after the 2008 recession is usually referred to as a "recession" rather than a "cycle". The U.S. unemployment rate was at 10% in 1929, and it reached 25% in 1933. The U.S. unemployment rate went up to 14% in 1938, but then fell to less than 5% by 1940.