The term Economic Cycle refers to the fluctuations of the economy between periods of expansion (growth) and contraction (recession). The current stage of the economic cycle can be determined by factors such as gross domestic product (GDP), interest rates, total employment, and consumer spending.There are four stages of an economic cycle: expansion, peak, recession, and depression. During the expansion phase, GDP grows as businesses invest in new products and services. The peak phase is when GDP reaches its highest point before beginning to decline. In the recession phase, businesses reduce their investment in new products and services leading to a decrease in GDP. The depression phase is when GDP falls below its original level and unemployment rises significantly.Many economists believe that we are currently in the late stages of an economic expansionary period that started around 2009-2010. Over time, it is inevitable that we will enter into a recessionary period where businesses will reduce their investment leading to a decrease in GDP.
