Business Cycle, term used in economics to designate changes in the economy. Ever since the Industrial Revolution, the level of business activity in industrialized capitalist countries has veered from high to low, taking the economy with it.
Apart from the traditional business cycle, specialized cycles sometimes occur in particular industries. The building construction trade, for example, is believed to have cycles ranging from 16 to 20 years in length. Prolonged building slumps made two of the most severe American depressions worse. On the other hand, an upswing in building construction has often helped to stimulate recovery from a depression.
Some economists believe that a long-range cycle, lasting for about half a century, also occurs. Studies of economic trends during the 19th and early part of the 20th centuries were made by the Russian economist Nikolai Kondratieff. He examined the behaviour of wages, raw materials, production and consumption, exports, imports, and other economic quantities in Great Britain and France. The data he collected and analysed seemed to establish the existence of long-range cycles. His “waves” of expansion and contraction fell into three periods averaging 50 years each: 1792-1850, 1850-1896, and 1896-1940. Such studies, however, are not conclusive.