The four phases of the business cycle are Peak, Recession, Trough, Expansion.
The peak is when the economy is at its highest as far as its the demand for goods and
services and the market prices.The Recession is when the economy is declining for two or
more quarters out the year. the demand is declining. The Trough is when the economy is at
the lowest and the end of recession. The expansion is when the economy is on the rise as far
as employment, market, etc.AS many have mention the recent covid pandemic is the most
recent occurrence of changes in the business cycle and the results from it. During the
pandemic the market price for goods went up while people were unemployed or had little to
no income. One thing that my training facility and I benefited from was the people being
tired of being stagnant in their house. As a trainer the demand for training services went up,
and so I was able to provide service in local parks etc. With the demand being so high I was
able to charge a lower price per hour. By doing that I kept the client coming back because
they got good work for a low affordable price. So through the pandemic and results of the
pandemic I was able to go through an expansion and build clientele for the future. The four
different phases in the business cycle are as follow:
Peak: This is the point in which the real GDP reaches a maximum. It is when the economy
is at its best and marks the end of the expansion.
Recession: A decline in real output for at least two consecutive quarters. The demand for
goods and services starts declining rapidly and steadily in this phase.
Trough: The lowest point of economic activity where the real GDP reaches the minimum.
This marks the end of a recession.
Expansion: In this phase, the real GDP, income, and employment are increasing. It is
typically accompanied by a rise in employment, consumer confidence, and equity markets
and is also referred to as an economic recovery.
I remember in 2007-2008 during the recession, I used to be a local P&D truck driver when
our small company suddenly became even smaller! We were a crew of six drivers, two
warehouse people, and a dispatcher. As recession hit, we kept seeing the owners (a married
couple) letting people go. I knew I had to learn the office operations to make myself more
valuable if they needed help in there. At the end, the company ended up with only the two
owners, one driver, and me as a “hybrid” driver that could work in the office as well if
needed. Frictional Unemployment is unemployment resulting from workers searching and
waiting for jobs.
Structural unemployment occurs when workers skills don’t match the jobs available.
Cyclical Unemployment results from changing business cycles.
Seasonal Unemployment happens when workers search and wait for jobs due to seasonal
demands.
A real-life event that I’ve researched happened today as I researched how the current
administration gives us unemployment data that in my opinion doesn’t reflect the true state
of the economy. I want to know the amount of “discouraged workers” and its percentage. I
also want to know if my tax money is funding their “discouraged“ lifestyles. I do not trust
the government to give me statistical data anymore.I also researched “Recession” and saw
that the Bureau of Labor statistics is trying to redefine the term recession on its website
mirroring the current administrations attempts. I understand now why the incumbent
administration will not publicly acknowledge the “recession” because historically it shows
that the incumbent has lost the election. Makes a lot of sense and I don’t believe any
statistical data from the media now at all. A business cycle, also known as an economic
cycle, is the circular movement of an economy from expansion to contraction and back
again. Growth characterizes economic expansion. A contraction, on the other hand, results in
a recession, which is characterized by a drop in economic activity that lasts at least a few
months. The economic cycle is divided into four stages, which are also known as the
business cycle. Expansion, Peak, Contraction, and Trough are the four stages. During an
expansion, the economy grows relatively quickly, interest rates are low, production rises,
and inflationary pressures build. When growth reaches its maximum rate, a cycle has
reached its peak. Peak growth usually causes some economic imbalances that must be
addressed. A correction occurs during a period of contraction in which growth slows,
employment declines, and prices remain stable. The cycle trough is reached when the
economy reaches a low point and growth begins to recover. A number of key metrics can be
used to determine where the economy is and where it is going. For example, when
unemployment begins to fall and more people are fully employed, the economy is usually in
an expansion phase. Similarly, when the economy contracts, people prioritize and cut back
on their spending. Because lenders frequently tighten their lending requirements, money and
credit are becoming more difficult to obtain. My best friend was looking for a place to live
two months ago, but the prices for some of the apartments and houses she saw were nearly
double what I pay for my mortgage. I heard on the radio a while back that we needed two
household incomes prior to the pandemic, but during the pandemic, the two-household
income became one income because one of the parents needed to stay at home with the
children. As a result, many people have discovered that they can live on a single income.
Nonetheless, the government and corporations are in the red as a result of the pandemic, and
in order to get back into the black, prices are rising, affecting renting, food, and so on. Peak
is when unemployment is low, and business is running at its highest rate.
Contraction is when unemployment grows and business slows down.
Trough this is where unemployment will be the highest, and this is the period after a
recession or contraction where the business cycle starts to swing back toward expansion.
Expansion is when unemployment falls and businesses invest in new opportunities.
The boating market experienced a slow down in 2009. Overall sales at my company dropped
from the previous year by nearly 10%. This slow down is an example of a contraction
period. Internally the company was focusing on cost savings. Externally the company was
focused on gaining new market share and expanding the business. It's common for
companies to focus solely on cost savings at a time like this, but it's important not to lose
focus that your competitors are focusing on cost savings as well and may lose customers as
a result. If you can pick up those customers lost by your competitors, you can offset the
losses experienced by the economic downturn during this period. One impact I experienced
during this period was that raises were reduced for that year.Two years later, business began
to pick up, and by the end of that year, we had already exceeded our sales from 2008. This
increase is an example of an expansion period. At this point, the focus on cost savings was
reduced, though it never went away completely. We were now focusing on expanding the
operations within the plant. Sales were moving into additional markets as well as our
original ones. The four phases of the business cycle are peak, trough, recession, and
expansion. If you look and say these phases out loud, they mean what they sound like in the
terms we all well know. Peak is when the economy is doing well at it's peak, trough is like a
tough time where everything is at it's worst after a recession is over, recession is when
everything is declining and financials are at a low and expansion is when things are building
back up, increasing employment, making money again.
We all see these things daily in our current economic climate and in our daily live and
businesses. Our current economic climate i think right now is in recession although it has not
officially been declared. Our supplies are increasing by the day, the cost to feed a family is
about $100 more a week and raises at work at not insight due to the decline in business,
spending, costs and supply chain issues. There is a high rate of businesses closing or not
being able to make ends meet as for some people in their personal lives as well. It is all part
of this business cycle and for some it is really bad.
With my personal household, although we are not in a bad place, we see the difference in
costs on everything and when adding them all up we have decided to cut back on certain
things like buying extras or less of those fancy type cheeses that we really don't need. We
have cut back on our boat outings due to the rise in gas prices and it's costing me almost
$800 a month for gas just to get to work. With that being said, my company has decided not
to negotiate new contracts for services and goods, just to extend the current ones due to
materials pricing in hopes they will come down and not get locked into 3 year agreements at
the current prices. The natural rise and fall in economic growth that takes place throughout
time is known as the business cycle. You can utilize the cycle to analyze the economy and
strengthen your financial decisions. Basically, it is the measured amount of productivity in
the USA.
The four stages in order are as follows. expansion, peak, contraction, and trough.
In an expansion, the stock market experiences rising prices, and investors are confident.
Businesses receive more funding and make more, and consumers have more money to
spend. This is represented by the upward curve. An example is when the economy comes
out of recession.
Next is peak. The peak is displayed on a graph as the highest portion of the curve before
moving downward. It occurs when all of the expansionary indicators begin to level off. It is
the highest within the expansion stage and can take some time before going into the next
phase which is contraction.
A contraction is portrayed on a graph as the part of the curve that is consistently decreasing.
This is because, In this phase, there is no economic growth. The economy enters a downturn
when the GDP rate declines. Companies lay off workers, the unemployment rate rises above
average levels, and prices start to fall.Finally, there is the trough. Eventually, the GDP has a
point where it is in the process of turning positive again. The economy begins a transition
from the contraction phase to the expansion phase. A trough is displayed on a graph as the
lowest point of the curve. This is the reset of the cycle so it can start again once again. The
four phases of the business cycle are as follows : peak, trough, recession, and depression.
Peak is when a business is at its maximum point. Trough is the lowest point of economic
activity. It is declared to be the mark of the end to a recession. Recession is the time period
when there is a decline for two consecutive periods in business. Depression is a recession
that lasts for a long period of time. My husband and I have been together for almost eleven
years. He was an entrepreneur when we met. He has a flooring installation company but he
was also in the commercial cleaning business too. He got out of that business right before
the pandemic, which was good timing. We started a business in transportation. This was a
business that allowed me to run it from the comfort of my home. Needless to say, we are out
of that business due to the inflation of gas prices. To keep the truck fueled was eating away
the proceeds and not to mention the fact that rates per mile did not increase according to the
fuel prices. This impacted so many people in the business. The dispatching companies were
running out of clients because trucking companies were trying to wait for the rate per mile to
increase to compensate for the fuel prices. For the sake of those who were depending on
transportation for their living, I pray that things are getting better. For us we are no longer in
the business. We did experience a peak period. It was good while it lasted.
