Glossary: M02 — Understanding Business Cycles
| Term | Definition |
|---|
| Business cycle | Recurring pattern of expansion and contraction in economic activity |
| Expansion | Phase of increasing GDP, employment, and economic activity |
| Peak | Maximum point of economic activity before contraction begins |
| Contraction (recession) | Phase of decreasing GDP and economic activity |
| Trough | Minimum point of economic activity before expansion begins |
| Credit cycle | Fluctuation in credit availability and borrowing that amplifies business cycles |
| Leading indicator | Variable that changes direction before the overall economy |
| Coincident indicator | Variable that changes direction at the same time as the economy |
| Lagging indicator | Variable that changes direction after the economy has turned |
| Nowcasting | Real-time monitoring to estimate current economic conditions (e.g., current GDP) |
| Inventory-sales ratio | Ratio of business inventories to sales; lagging indicator |
| Unit labor cost | Labor cost per unit of output; lagging indicator |
| Industrial Production Index | Measure of output of manufacturing, mining, utilities; coincident indicator |
| Building permits | Leading indicator reflecting future construction activity |
| Unemployment rate | Percentage of labor force without jobs; lagging indicator |