Business cycle

A business cycle describes co-movement in broad activity, not a clockwork periodicity. Expansions run from trough to peak; contractions run from peak to trough. Duration and depth vary.

Output, income, employment, sales, and production provide overlapping evidence. One release can be noisy or revised, and different series can turn at different times. Chronology is distinct from a real-time nowcast and from a causal theory.

For the United States, the NBER committee retrospectively evaluates multiple indicators. Its chronology is widely used but is not a government statistical rule, and it does not reduce recession to two negative real-GDP quarters.

Read the chronology carefully

Suppose real output falls in two quarters while employment and real income continue to expand. The two-quarter result is a warning signal, but it does not by itself settle the U.S. peak date. The NBER procedure FAQ explains the committee's broader, retrospective method. Record each series, frequency, release date, and revision vintage before comparing them. A peak or trough date organizes chronology. It does not prove which shock caused the change or tell a company what action to take.