Fox-Trot Economy - Explained
What is a Fox Trot Economy?
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Table of ContentsWhat is a Fox-Trot Economy?How does a Fox-Trot Economy Work?Origin of the Fox-Trot EconomyThe Impact of a Fox-Trot EconomyAcademic Research on a Fox-Trot Economy
What is a Fox-Trot Economy?
A "fox-trot economy" refers to an unexpected pattern of economic growth and activity in which an economy experiences two periods of fast growth and another two periods of slow growth. This term follows the pattern of the fox-trot dance which has two fast steps and two slow steps. When an economy exhibits the fox-trot economic pattern, it experiences two periods of economic expansion and growth, followed by two periods of economic decline. Hence, this economy shows fast-fast movement, followed by slow-sow movement.
How does a Fox-Trot Economy Work?
A fox-trot economy has a basic pattern, which is two fast movements and then two slow movements. This economic depiction was made popular by Jeffery Saut and it describes economic growth as a period when an economy produces more goods and services and slow growth as a period when production declines. The fox-trot pattern is one of the economic patterns that predicts the dynamics of growth in an economy.
Origin of the Fox-Trot Economy
The fox-trot economy originated from the popular fox-trot ballroom dance in which two fast steps are taken by the dancer and two slow steps. When applied to an economy, it depicts a pattern of two periods of rapid growth followed by two periods of slow growth. The term "fox-trot economy" became popular in the early 2000s when Jeffery Saut, an investment strategist developed the term in an economic context.
The Impact of a Fox-Trot Economy
In a fox-trot economy, during the periods of rapid growth, there is high spending and consumption in the economy with less saving, however, when the economic growth becomes slow, individuals begin to save rather than spend. Investors, retailers and businesses also experience a fair share of challenges in a fox-trot economy as rapid economic growth is followed by slow growth. For instance, periods of slow growth in an economy are often volatile than when there is economic growth. However, in a fox-trot economy, the economy bounces back, even after periods of slow growth.