Home > Growth, Inflation > Cyclical vs Structural

Cyclical vs Structural

November 27, 2015 Leave a comment Go to comments

Below are some interesting graphs and comments from a recent ANZ Bank presentation which address the issue of unemployment.

Both cyclical and structural factors seem to have played an important role in the recent recession. From a cyclical point of view output and the unemployment rate of the economy reflect this and should recover to pre recession levels. Structural change involves the shift of resources from slower growing areas of the economy to faster growing areas. Indicators such as the savings rate and employment in the different sectors of an economy, seem to be driven more by structural changes and might not return to levels seen before the recent recession.

Economists spend a lot of time talking about the “cycle”, but this can be at the expense of the “trend”.

  • And isn’t it the trend that is more important for businesses?
  • We can get bogged down in the detail and forget about some of the high level themes that dominant
  • Often these trends or themes can be relatively clear. But a lot of the time they are not.
  • Arguably, today’s economic backdrop is one where there are more questions over the overarching trends than the cycle itself (although that is not that clear either!).

Structural Questions

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