The recurring pattern economies move through: expansion, peak, downturn, and recovery, over and over.
The business cycle describes the natural, recurring pattern an economy tends to move through over time: expansion, where growth and hiring pick up, a peak, where growth tops out, a downturn or recession, where activity contracts, and then a recovery that eventually leads into the next expansion. No two cycles look exactly alike in length or severity, and economists disagree constantly about where in the cycle the economy currently sits, but the framework itself is one of the most basic lenses used to interpret almost every piece of economic data that gets released.
Part of the Open Bell Glossary — plain-English explanations of the terms that come up on the show. Browse every term.