Business cycle.

In plain English

The business cycle is the economy's recurring swing between growth and decline. An expansion is a stretch of rising output, hiring, and spending; it eventually peaks, turns down into a contraction or recession, hits a trough, and then recovers into the next expansion. In the United States, the National Bureau of Economic Research, a private nonprofit, is the recognized arbiter that dates the start and end of recessions, looking across a range of indicators rather than a single rule. Cycles vary in length and depth, so the pattern repeats but never on a fixed schedule.

01Why it matters

Where the economy sits in its cycle shapes jobs, wages, interest rates, and markets, so having a frame for expansions and contractions helps make sense of the economic news cycle without predicting its exact timing.

02The math, step by step

A long expansion sees hiring and spending grow, then conditions peak and slip into a recession where output and jobs fall, until a trough gives way to recovery. The NBER later marks the peak and trough dates by weighing many indicators together.

03What this is NOT

04Receipts

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