A fox-trot economy is an economy that experiences periods of rapid growth followed by equal periods of slow growth. Jeffery Saut coined this term, paralleling the fast and slow shuffle to the two fast steps, two slow dance steps of the fox-trot. A fox-trot economy is believed to be more common in mature economies where extended periods of rapid growth are no longer likely.
The fox-trot pattern is a gradual growth where the economy moves generally upwards with settling periods in-between growth cycles. In the U.S., the fox-trot pattern is influenced by the Federal Reserve’s attempts to create a Goldilocks economy. Because the balance is so delicate and the tools that the Fed has are so blunt, the economy often ends up stuttering ahead and stopping rather than smoothly accelerating as a Goldilocks economy is meant to. The different rates of growth have different effects on the currency of a nation. Generally speaking, the better the economy, the stronger the currency.
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