Business Cycle

The 4 Phases of Economic Growth

Phase Descriptions

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Expansion

Consumer and business confidence levels are increasing as the economy improves. Unemployment begins to decline while income, trade, output, credit, investment, CPI, GDP, and per capita GDP start to readily increase.

The state of the economy in an expansion would improve the lives of a majority of Americans. There would be more goods to buy at a cheaper cost, and businesses would be able to flourish as profits are expanding.

Peak

Consumer and business confidence is at is highest point and is on the cusp of looking down. Unemployment is at its lowest during the cycle but the economy is showing signs of reversing that trend. Income, trade output, credit, investment, CPI, GDP, and per capita GDP are at its highest levels.

At a peak, American citizens do not know they are at the height of economic expansion. This is a great time period for American citizens but they need to prepare for the struggling times ahead. The economy will hit a tipping point and goods will begin to rise in price causing other pitfalls to simultaneously occur.

Recession

Consumer and business expectations are negative as they look towards the future. Unemployment is increasing during a recession and the economy is showing no signs of recovering any time soon. Income, trade output, credit, investment, CPI, GDP, and per capita GDP are declining.

A recession is not something the American public wants to go through. Mothers and fathers lose jobs, the price of goods increase, and the ability to have a healthy stable income becomes a much more difficult task. In the midst of this downturn, confidence is very bleak among society.

Trough

Consumer and business expectations are at its lowest point but there are glimmers of hope that show that the economy may soon take a turn for the better. Unemployment reaches its highest levels, while income, trade output, credit, investment, CPI, GDP, and per capita GDP are all there lowest levels.

A trough is the lowest point in which citizens can expect to struggle during the cycling of economic phases. Nothing seems feasible during this time but there are tiny instances of hope that show the economy may be bouncing back. All goods and services in this phase of the business cycle are expensive and it is hard to sustain a living.