Here's What 8 Economic Cycle Theories Say About The World Today

joseph schumpeterJoseph Schumpeter

Photo: Wikimedia Commons

Economic and market phenomena occur in cycles.The basic business cycle can be loosely defined a series of economic expansions and contractions.

But how long are these cycles and how can they be applied?

We compiled eight “cycle” theories that tell us varying things about where markets and the economy are going.

Some have been around for decades, others are fairly new.

One is even based on sun spots.

The Kondratiev Cycle

Creator: Nikolai Kondratiev (1892-1938)

Duration: 50-60 years

Theory: Economic growth in capitalist countries comes in long waves and are determined by technological innovations.

What it predicts: Prices, interest rates, foreign trade, coal, pig iron production

Where we are now: The Kondtratiev cycle indicates we're in a blank period and at least 30 years away from the next economic expansion period.

Source: Andrey V. Korotayev

The Schumpeter Cycle

The Kitchin Cycle

Creator: Joseph Kitchin (1861-1932)

Duration: 40 months

Theory: The market gets 'flooded' with commodities as growth accelerates. When demand declines, prices drop and the produced commodities get accumulated in inventories. But there is a delay between this and when entrepreneurs must reduce output.

What it predicts: Demand, prices, output

Where we are now: The Kitchin cycle indicates prices are in an upswing period, according

Source: Andrey V. Korotayev

The Juglar Cycle

Creator: Clément Juglar (1819-1905)

Duration: 7-11 years

Theory: In addition to Kitchin's lagging inventory signal, there is an additional lagging fixed investment signal.

What it predicts: Capital investment levels

Where we are now: The Juglar cycle says we're at the beginning of an upswing in capital investment, according to

Source: Andrey V. Korotayev

The Kuznets Cycle

Creator: Simon Kuznets (1901-1985)

Duration: 15-25 years

Theory: As a country develops, there is a market-driven cycle that at first increases inequality, and then decreases it after a certain average income is attained.

What it predicts: Income

Where we are now: The Kuznets cycle indicates that given current high income inequality, the U.S. should be at a new stage of development

Source: Andrey V. Korotayev

The 17.6 Year Cycle

Creator: Unknown, popularised by Art Cashin

Duration: 17.6 years

Theory: Stocks cycle through 'fat' and 'lean' years.

What it predicts: Stocks

Where we are now: The Cashin cycle says we are half-way thru a lean period for stocks, Cashin said recently.

Source: Art Cashin

The Lehman Wave

Creator: Robert Peels, Maximiliano Udenio et. al

Duration: 12-18 months

Theory: During periods of market instability, sales drop substantially more with companies upstream in the supply chain.

What it predicts: Sales

Where we are now: The Lehman wave says market volatility has dampened but is still a factor for companies' sales figures.

Source: Peels and Udenio

The Jevons Cycle

Creator: William Jevons (1835-1882)

Duration: 11 years

Theory: Business cycles move in concert with sunspots.

What it predicts: Food prices, inflation

Where we are now: The Jevons cycle says prices are still on an upswing, according to solar data from NASA.

Source: Cycle Research Institute

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