The Four Phases of Business.

We started from the bottom now we here.

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Phase 1 Prosperity/Peak

In this phase, unemployment remains low. As for income, it is relatively high. Both consumers and businesses have confidence about the future state of the economy leading to more purchases. Demand is high allowing for producers to expand businesses to take advantage of marketplace opportunities. There are also high levels of output and trade. CPI, GDP, and per capita GDP are high.

Phase 1 daily life

As your daily American seeing that economy is good, if I am running a business I will be more likely to invest a higher amount in my business for a better profit. As a consumer I will be more likely to start making more purchases because of having more money in my pocket. Because of higher credit out there I will also be able to make more loans. Right now is the peak of good living.
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Phase 2 Recession/Contraction

This is an economic downturn in the business cycle. CPI, GDP, and per capita GDP begin to decrease. Both producers and consumers start to lose confidence in the economy so they are more cautious with their spending. Employment, income, trade, and output are all starting to decrease as well.

Phase 2 daily life

For normal Americans, they will start to postpone major purchases because of the bleak outlook for the state of the economy. For those running businesses they will be more cautious about their investments and will be less likely to spend more than what is necessary for their business. Consumers will also begin to buy basic low priced products that satisfy their needs rather than their wants as they are getting less average income. Banks are also decreasing their credit, making it harder to get loans.
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Phase 3 Depression/Trough

This is the culmination of an economic recession. At the very bottom of the business cycle, a depression is a further decrease in the health of the economy. Both employment and consumer spending is at an all time low and is the same for the CPI, GDP, and per capita GDP. Trade and output also fall very low. As with the trend consumer and business confidence is also at it's lowest.

Phase 3 daily life

Both consumers and producers are at their lowest spending. Producers are creating less goods and services because there aren't as many of us to buy them. There are many unemployed and it is also very difficult to get a loan because banks are decreasing credit even further. Many people are struggling financially and things are not looking good for the economy.
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Phase 4 Recovery/Expansion

This is the stage where the economy is recovering from bad health. Consumers are now buying more goods because more people have jobs and are working. Businesses begin to invest and trade more. CPI, GDP, and per capita GDP begin to increase again. A new found confidence in the economy has also lead businesses to start creating more goods in response to more spending and an increase in trade and investment.

Phase 4 daily life

More people are starting to spend more on their wants rather than their needs. Business owners are now more confident in their investments and are willing to put more money into these investments. More people are now going to work and have jobs and bigger paychecks.