Business cycle dating
It is typically the last positive growth before a contraction starts again.
It is not easy to predict when the economic expansion is likely to peak, but you have to be wary if the economy grows by 4 percent or higher as the peak can be just around the corner.
Based on NBER record, the trough phase for the 2008 crisis occurred during the second quarter of 2009 when the U. During the recent crisis, this phase started in the third quarter of 2009 when the national output managed to grow by 1.6 percent. It is said that because of the nasty contraction phase in 2008, the economic expansion has been slow in generating jobs.
This was a result of the stimulus spending of the U. The peak phase refers to the period when the healthy economic growth starts to slow down.
Other data being used are real personal income, employment, retails sales, and industrial production.
Business cycles nowadays are less predictable and widely irregular. Since the 1940s, a business cycle usually lasted 3 to 5 years in between peaks.
These are applied to German GDP data comprising 1970–2006.A deflation happens when asset prices collapse, as was the case in the 2008 crisis particularly the housing sector.When customers stop buying for fear that they may lose their job anytime soon, businesses are adversely affected and they may lay off workers.The growth period took 44.8 months on the average while a recession took about 11 months.In comparison, the period of economic contraction during the Great Depression lasted for over 3 and half years.
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One very critical factor that can influence the business cycle is the confidence of investors and consumers, and of business people and politicians.