Contraction
kun-TRAK-shun
/kənˈtrækʃən/
A phase of the business cycle characterized by decreasing economic activity, falling employment, and reduced production.
Contraction is the period between a peak and a trough in the business cycle. It signifies a slowdown, and if severe enough, it can lead to a recession.
The story behind the word. The word 'contraction' comes from the Latin 'contractio,' meaning 'a drawing together, a shortening.' It combines 'con-' (together) and 'trahere' (to draw). While it has been used in English since the 14th century for physical shrinking, its economic sense, referring to a period of economic decline, became prominent alongside 'expansion' in the study of business cycles.
Word relationships
- downturn: A general term for a decline, less formal and specific than 'contraction'.
- recession: A specific type of contraction defined by a fall in GDP over two quarters.
- expansion: A phase of the business cycle characterized by increasing economic activity.
- growth: An increase in size, amount, or degree.
Word family
- contract (verb): to decrease in size, number, or range
- contractual (adjective): relating to a contract or agreement
Collocations
- economic contraction
- period of contraction
- sharp contraction
- market contraction
- credit contraction
Example sentences
- "The latest data indicates a significant contraction in manufacturing output, signaling a potential slowdown for the broader economy." Analyzing market trends.
- "Periods of rapid expansion are often followed by inevitable periods of contraction as markets adjust." A historical economic analysis.
Memory hook
Think of the economy 'contracting' or shrinking, like a muscle tightening. Economy Shrinks
When not to use
Do not use 'contraction' to describe a personal feeling of anxiety or a physical muscle spasm in an economic context.
Fun facts
- The term 'contraction' is broader than 'recession'; all recessions are contractions, but not all contractions are recessions (some might be too mild or short).
- Economic contractions are often triggered by factors like financial crises, supply shocks, or a decrease in consumer confidence.
Related words
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