Business Cycle Analysis

Overview

The business cycle describes recurring fluctuations in economic activity: expansion → peak → contraction → trough → expansion. Understanding the current phase helps businesses time investments, manage inventory, and prepare for downturns or recoveries.

Framework

IRON LAW: Cycles Are Inevitable, Timing Is Not Predictable

Business cycles WILL happen — no economy grows forever. But predicting
EXACTLY when a peak or trough occurs is unreliable. Focus on identifying
the CURRENT phase and preparing for the NEXT one, not predicting exact
turning points.

The Four Phases