Economic cycles

Expansion

1

Expansion is the phase of the business cycle where the GDP of a country grows for two or more consecutive quarters – Moving from a trough to a peak. On average, it lasts for between 4 and 5 years.

2

Expansion is characterized by a rise in employment, increased consumer confidence, and stock markets. Money is cheap to borrow, businesses build up inventory and customers increase their spending.

3

The expansion phase can be identified through low interest rates, the increased average number of weekly hours worked by manufacturing employees, and a low level of unemployment claims.

4

Companies that perform well in the expansion phase include basic industry stocks (i.e. chemicals, paper, steel) and cyclical consumer stocks (general retailers, airlines, leisure, automobiles).

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