Trend growth economics is the study of how changes in a country's economy tend to affect the prices of goods and services over time. It looks closely at how demand and supply forces within a market affect prices. It can be used to forecast future inflation rates as well. This is essential for a business looking to expand, since predicting inflation is an important part of knowing where to invest. While this is a fairly simplistic description of the process, it is enough to say that it is related to market pricing.
The concept goes all the way back to the onset of the industrial revolution. In the late 1800s, industrialization marked the dawn of new markets that allowed consumers to get products at a lower cost. These markets were usually organized through a central body like the world's largest trading organization, such as the New York Stock Exchange. Prices across the board would be uniform across the board, allowing producers and consumers to leverage economies of scale.
But what happens when a product becomes more popular? The obvious result is that it must go above and beyond what is actually required for its price to remain constant. Why does this happen? Simple supply and demand. If you allow too many consumers and manufacturers to sell a certain good, then it will become more expensive than it needs to be or will drive the overall market down.
But what if there are too few consumers and manufacturers in a given market? This creates a problem. Since there aren't enough buyers and sellers to push the price up, it drops. This is what is known as a supply reaction, or a “market imbalance.” By trapping buyers and sellers in a downward spiral, this can result in a recession of long-term trends.
When this happens, it is called a market inflection, and it can last several years. While a short-lived inflection may not have much impact on the economy, a long-term trend growth cycle can. Long-term trend growth tends to result in higher inflation, higher interest rates, and lower consumer and business spending. An economy can only rebound so much before eventually succumbing to the adverse effects. These things will always have an effect on an economy's ability to grow.
So is there any hope for economies in turbulent times like these? Not really. When economies are in doubt, it is wise to heed economists' advice to “buyer beware.” When an economy is facing a problem, consumers should stay on the sidelines and wait for the upside. The upside is definitely something to watch out for, but it certainly isn't impossible to see in today's uncertain economic climate.
When an economy is in trouble, there are usually bad signs everywhere. Consumer confidence is dropping, and businesses are looking to cut costs due to poor sales. There are signs that the slowdown in the economy may continue, and it could cause a consolidation of all bad loans. If this happens, consumers could become even more scared, which only serves to exacerbate the trend growth.
If you want to use trend growth economics to your advantage, you need to stay vigilant. Don't be afraid to take risks and invest in areas that you're unsure of. But you should also use this same vigilance to watch out for bad trends as they begin to form. . . . . . . Be careful to note them, and act before they turn into trends. You'll be glad you did!
There are a few ways to keep an eye on what's going on in your own economy. One of the ways is to pay attention to news broadcasts about government and other local issues. Watch for news reports about trends that could affect your market, since they do affect everyone. For example, if you notice that a particular city is experiencing a slowdown, that could mean that there aren't enough jobs in the area to support the residents. This can definitely impact the way your city does business.
Another good way to monitor trends is by reading business magazines. They'll give you a good look at the business climate. Be careful to pick one that covers your industry closely. You'll also want to read the business section of newspapers, since they tend to write about the most important things going on in your industry. Don't just skim through them, though. Pay close attention to the information they publish.
Of course, you don't need to be living in your city to get a good feel for what's going on in its economy. The internet is full of information and opinion about everything, including your own country. It's easy to get on the internet and find forums, blogs, and news stories about what's happening in the country and in your local area. Pay close attention to what people are saying about the topic, especially about trends in your industry. When you pay close attention to the information out there, you'll know when there's something that should interest you about your own economic environment.