The Business Cycle

US GDP Yearly Growth

Chart showing the yearly growth rate of US Gross Domestic Product (GDP), highlighting economic expansions and recessions.

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Loans & Leases Yearly Growth

Chart showing the yearly growth rate of loans and leases, indicating credit availability and economic activity.

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Nonfarm Payrolls Yearly Growth

Chart showing the yearly growth rate of nonfarm payrolls, a key indicator of employment and labor market health.

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US Unemployment Rate

Chart showing the US unemployment rate, indicating labor market conditions and economic health.

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Initial Unemployment Claims

Chart showing initial unemployment claims, a leading indicator of labor market distress and potential recessions.

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Sahm Rule Recession Indicator

Chart showing the Sahm Rule recession indicator, which signals a recession when the 3-month moving average of the unemployment rate rises 0.5 percentage points above its low point.

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Consumer Opinion Survey

Chart showing the University of Michigan Consumer Sentiment Index, a measure of consumer confidence and spending intentions.

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Composite Leading Indicator

Chart showing the Composite Leading Indicator, a tool for forecasting changes in the direction of the economy.

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S&P 500 Yearly Growth

Chart showing the yearly growth rate of the S&P 500 index, reflecting stock market performance and economic health.

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MSCI USA Market Cap Weight vs Equal Weight Ratio

Chart showing the ratio of market capitalization-weighted MSCI USA index to equal-weighted, indicating market concentration and leadership.

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MSCI Cyclical vs Defensive Sectors Ratio

Chart showing the ratio of cyclical sectors to defensive sectors in the MSCI USA index, reflecting economic sensitivity.

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Gold Price Yearly Growth

Chart showing the yearly growth rate of gold prices, indicating inflation expectations and safe-haven demand.

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Crude Oil Yearly Growth

Chart showing the yearly growth rate of crude oil prices, reflecting energy costs and supply-demand dynamics.

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Producer Price Index Yearly Growth

Chart showing the yearly growth rate of the Producer Price Index (PPI), measuring inflation at the producer level.

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Copper to Gold Ratio

Chart showing the ratio of copper prices to gold prices, a potential indicator of economic growth and industrial demand.

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Fed Funds Rate

Chart showing the Federal Funds Rate, the interest rate at which depository institutions lend funds maintained at the Federal Reserve.

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Yield Curve Spread between 10-Year and 1-Year Yield

Chart showing the spread between 10-year and 1-year Treasury yields, a key indicator of the yield curve slope and recession risk.

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Real 1-Year Interest Rate

Chart showing the real 1-year interest rate, calculated as the nominal rate minus inflation, indicating the true cost of borrowing.

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Government Total Public Debt to GDP Ratio

Chart showing the ratio of total public debt to GDP, indicating the government's debt burden relative to economic output.

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M2 Money Supply Yearly Growth

Chart showing the yearly growth rate of M2 money supply, a measure of the total amount of money in circulation including cash and easily convertible near money.

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Interpretation

The business cycle, also known as the economic cycle, refers to the fluctuations in economic activity that an economy experiences over time. It typically consists of four main phases: expansion, peak, contraction (or recession), and trough. The cycle can be measured and reflected in various economic indicators such as GDP growth, employment data, consumer confidence, leading indicators, stock market performances, interest rates, commodity prices, and sector performance. These indicators can be visualized in charts that reflect the cyclical patterns of rising and falling economic activity.
The causes of economic cycles are complex, involving factors such as fluctuations in aggregate demand (consumer spending, business investment, government spending), monetary influences (interest rates, credit availability), and external shocks (technological changes, natural disasters, political events). Psychological factors like confidence and speculation, as well as structural shifts (demographic changes, industry transformations) and supply-side elements (productivity, resource availability), also play a role.

Further Information

• CFI: Business Cycle
• Investopedia: Economic Cycle: Definition and 4 Stages of the Business Cycle
• Wikipedia: List of recessions in the United States
• Longermtrends: Stocks to Commodities Ratio
• Longermtrends: The Real Interest Rate
• Longermtrends: US Debt to GDP
• Longermtrends: The Real Interest Rate
• Longermtrends: Market-cap Weight vs. Equal Weight
• Longermtrends: Cyclical vs. Defensive Stocks

Data Sources

• S&P 500
• Federal Reserve Bank of St. Louis: Recent S&P 500 prices
• Multpl: S&P 500 prices until 1927
• Yahoo Finance: S&P 500 prices from 1928 until 2023
• US gross domestic product
• Federal Reserve Bank of St. Louis: US gross domestic product since 1947
• Congressional Budget Office: Historical gross domestic product
• Loans and leases in bank credit
• Federal Reserve Bank of St. Louis: Loans and leases in bank credit since 1973
• Federal Reserve Bank of St. Louis: Loans and leases in bank credit from 1950 until 1973
• OECD: Consumer opinion survey
• OECD: Composite leading indicator
• Federal Reserve Bank of St. Louis: Nonfarm Payrolls
• Federal Reserve Bank of St. Louis: Unemployment rate
• Federal Reserve Bank of St. Louis: Initial claims
• Federal Reserve Bank of St. Louis: Sahm Rule Recession Indicator
• Oil prices
• Federal Reserve Bank of St. Louis: Oil prices
• Macrotrends: Historical oil prices
• Gold prices
• Yahoo Finance: COMEX gold price
• OnlyGold: Historical gold prices from 1793 until 2000
• Producer Price Index (PPI)
• Federal Reserve Bank of St. Louis: Producer Price Index for All Commodities
• Historical Statistics of the United States, Colonial Times to 1970: Commodity Index until 1913 (Chapter E, pages 199-201)
• Copper prices
• Yahoo Finance: Copper prices since 2000
• U.S. Geological Survey: Historical copper prices until 2000
• Federal Reserve Bank of St. Louis: Federal Funds Rate
• Treasury constant maturity rates
• 10-year Treasury constant maturity rate
• Stooq: Data since 1871
• 1-year Treasury constant maturity rate
• Federal Reserve Bank of St. Louis: Data since 1990
• Capital Markets Data: Data from 1929 until 1990 (originally from here and here)
• Robert Shiller Online Data: Data until 1929
• M2 money stock
• Federal Reserve Bank of St. Louis: M2 money stock (weekly) since 1980
• Federal Reserve Bank of St. Louis: M2 money stock (monthly) from 1959 until 1980
• United States Census Bureau: Historical statistics of the United States, colonial times to 1970 (M2 money stock until 1959, Chapter X, pages 992-993). Following Bannister and Forward (page 28), M2 prior to 1959 is calculated by adding "Currency held by the public" + "Deposits adjusted, commercial banks" + "Bank vault cash" + "Monetary gold stock" + "Deposits at nonbank thrift institutions"
• MSCI: USA
• MSCI: USA equal weighted
• MSCI: USA cyclical sectors
• MSCI: USA defensive sectors