A period of expansion ensued, with the GDP eventually surpassing its 2007 high, reaching $15.02 trillion by Sept. 2011. The offers that appear in this table are from partnerships from which Investopedia receives compensation. This date marked the official end of the Great Recession, which began following the economic peak reached in Dec. 2007. When the unemployment rate rises from month to month, the economy has most likely entered a contractionary phase. The business cycle depicts the increase and decrease in production output of goods and services in an economy. Back to: ECONOMIC ANALYSIS & MONETARY POLICY. [1][2], The period of the business cycle in which real GDP is increasing is called the expansion. In which the real GDP moves from the trough towards the peak. Troughs are a regular part of the business cycle. While troughs vary in severity—with some troughs only being minor setbacks in economic growth, and others being sustained periods of hardship—they are typically marked with declining business sales and earnings, layoffs, low credit availability, higher unemployment, and business closures (all compared to the other business cycle phases). 4. The prices on the Wall Street stock market fell from October 24 to October 29, 1929. And fluctuations in economic activity mean fluctuations in macroeconomic variables. It is only once the economic activity begins to increase again, as shown on economic indicators, that expansion is likely underway and the trough (or bottom) has been put in. How to say trough. It's when the economy hits bottom. The Great Depression. What to Call the Period Just Before Rock Bottom? The period marked from trough to peak. Expansion is the normal state of the economy; most recessions are brief. more. When the unemployment rate bottoms out, a trough has likely occurred. Incomes and wages are also indicators for where the economy stands in the business cycle. The trough is the fourth phase. Troughs are important as they mark a positive turning point for the economy. The time evolution of many variables of economics exhibit a wave like behavior with local maxima (peaks) followed by local minima (troughs). pneumatic trough n (Chem) a shallow dishlike vessel filled with a liquid, usually water, and used in collecting gases by displacement of liquid from a filled jar held with its open end under the surface of the liquid English Collins Dictionary - English Definition & Thesaurus / Trough Phase of the Business Cycle: Definition and Characteristics What’s it: Through phase is the lowest point of the business cycle . 3. A recession is the period between a peak of economic activity and its subsequent trough, or lowest point. A gutter under the edge of a roof for carrying off rainwater. The major U.S. stock market indices, such as the Dow Jones Industrial Average (DJIA) and Standard & Poor's 500 Index (S&P 500) also track closely with the business cycle. Another word for trough. Any of various similar containers for domestic or industrial use, such as kneading or washing. It occurs when the recession reaches its deepest point before leading to economic recovery and expansion. The economic cycle is the ebb and flow of the economy between times of expansion and contraction. The economy will then begin to contract as it slides down the backside of the peak and goes into recession. Earlier, the pace of degradation was reduced, later employment starts increasing. From there, the economy will hit a trough — its lowest point in the cycle. 4. At times, consumption, investment, employment, output, etc., rise and at other times these macroeconomic variables fall. In a recession, the point of the most negative GDP growth that immediately precedes the beginning of recovery.In other words, it is the lowest point in a business cycle.The term comes from charting, in which the x-axis represents time and the y-axis represents GDP growth.In this situation, the low point of a business cycle looks like a trough or pit. At trough, employment stop falling. A long, narrow, generally shallow receptacle for holding water or feed for animals. Peak: The upper turning point of a business cycle and the point at which expansion turns into contraction. In economics, a trough is a low turning point or a local minimum of a business cycle. In addition, in trough phase, there is a rapid decline in national income and expenditure. In a recession, the point of the most negative GDP growth that immediately precedes the beginning of recovery.In other words, it is the lowest point in a business cycle.The term comes from charting, in which the x-axis represents time and the y-axis represents GDP growth.In this situation, the low point of a business cycle looks like a trough or pit. Economists say that the business cycle goes through four main stages: 1. An economic trough occurred in June 2009. A business cycle may be defined as the period between two consecutive peaks. The period of the business cycle in which real GDP is increasing is called the expansion. In a trough, the stock market may hit bottom, unemployment is highest, credit is difficult to obtain, and … How to pronounce trough. Declines in the stock market coincide or foreshadow contraction in the economy. 4. In this phase, the growth rate of an economy becomes negative. Consumer discretionary is an economic sector comprising non-essential products that individuals may only purchase when they have excess cash. Write it here to share it with the entire community. Figure 1. In economics, a trough is a low turning point or a local minimum of a business cycle. The business cycle's four phases can be so severe that they’re also called the boom and bust cycle. Looking back afterwards you will see that this was not a terminal trough in your career. The time evolution of many variables of economics exhibit a wave like behavior with local maxima (peaks) followed by local minima (troughs). Troughs usually signify that economic decline has now turned in the opposite direction, and the economy is either growing or expanding. trough pronunciation. The business cycle moves in five phases: expansion, peak, contraction, trough, and recovery. At that date, the GDP stood at $8.87, down from $8.98 trillion in July 1990, the month the recession began. 4. Examples of trough in the following topics: The Business Cycle: Definition and Phases. 3. A long, narrow depression, as between waves or ridges. It then fell steadily for the next year and a half, a period of severe economic contraction. An economic trough is when economic activity hits a low point in its down cycle. any of several similarly shaped receptacles used for various commercial or household … During the U.S. recession of the early 1990s, the trough occurred in March 1991. It sent Wall Street into a panic. A simple definition: A fall in real GDP for two consecutive quarters i.e. Trough (Economy) Definition. A gutter under the edge of a roof for carrying off rainwater. Term trough Definition: The transition of a business cycle from a contraction and an expansion. trough (trôf, trŏf) n. 1. a. six months; A more detailed definition: A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real … Employment levels also offer an indicator of where the economy stands in the business cycle. In non-business English, a trough can mean: 1. The trough happens before the economy begins its recovery, … The end of a contraction carries the descriptive term trough. At the end of 2007, the U.S. GDP reached an all-time high of $14.99 trillion. Troughs are recognizable in hindsight, but harder to spot in real-time. 2. … Trough Definition A trough, in economic terms, can refer to a stage in the business cycle where activity is bottoming, or where prices are bottoming, before a rise. 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