A cyclical surplus or cyclical deficit occurs generally apart from policy considerations. Since surpluses and deficit are defined in simple terms as the government taking in more than it spends or the reverse, the term “cyclical” indicates when this occurs as a result of economic factors – whether it is is growing, stagnating, or contracting. Cyclical surpluses and deficits may be contrasted with “structural” surpluses or deficits, a term that indicates their occurrence despite economic performance.
Cyclical Surplus/Deficit (Economics Term)
The part of the federal budget surplus or deficit that results from cyclical factors rather than from underlying fiscal policy. This cyclical component reflects the way in which the surplus or deficit automatically increases or decreases during economic booms or recessions.