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An economy never holds still. Output rises and falls, prices drift up or occasionally down, and the number of people in work moves with them. Economists track these swings through a handful of broad measures, and they argue about what drives them and what, if anything, should be done in response.

Booms and slumps

Activity tends to move in cycles. A stretch of growth, with rising spending and hiring, eventually cools, sometimes gently and sometimes in a sharp contraction where output shrinks and jobs disappear. These downturns, called recessions, have many triggers: a financial shock, a collapse in confidence, a spike in the cost of energy or borrowing. Recoveries usually follow, though their speed and strength vary a great deal.

Prices and money

Inflation, a general rise in prices, draws close attention because it eats into what wages and savings can buy. Central banks try to keep it slow and steady, mostly by adjusting interest rates, which make borrowing cheaper or dearer and so speed up or slow down spending. Too little inflation can be a problem of its own, a sign that demand has stalled.

Behind the headline figures sit slower forces: how much a workforce can produce per hour, how many people are of working age, how freely goods and ideas cross borders. These shift over decades rather than months, and they set the ceiling on how fast an economy can grow without strain.