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What Is a Business Cycle?

Understanding the business cycle.

• Measuring and Dating
• Relationship With Stock Prices

The Bottom Line

Business cycle: what it is, how to measure it, the 4 phases.

Business cycles are a type of fluctuation found in the aggregate economic activity of a nation—a cycle that consists of expansions occurring at about the same time in many economic activities, followed by similarly general contractions. This sequence of changes is recurrent but not periodic.

The business cycle is also called the economic cycle .

Key Takeaways

• Business cycles are composed of concerted cyclical upswings and downswings in the broad measures of economic activity—output, employment, income, and sales.
• The alternating phases of the business cycle are expansions and contractions.
• Contractions often lead to recessions, but the entire phase isn't always a recession.
• Recessions often start at the peak of the business cycle—when an expansion ends—and end at the trough of the business cycle, when the next expansion begins.
• The severity of a recession is measured by the three Ds: depth, diffusion, and duration.

Madelyn Goodnight / Investopedia

In essence, business cycles are marked by the alternation of the phases of expansion and contraction in aggregate economic activity and the co-movement among economic variables in each phase of the cycle. Aggregate economic activity is represented by not only real (i.e., inflation-adjusted) GDP—a measure of aggregate output—but also the aggregate measures of industrial production, employment, income, and sales, which are the key coincident economic indicators used for the official determination of U.S. business cycle peak and trough dates.

Popular misconceptions are that the contractionary phase is a recession and that two consecutive quarters of decline in real GDP (an informal rule of thumb) means a recession. It's important to note that recessions occur during contractions but are not always the entire contractionary phase. Also, consecutive declines in real GDP are one of the indicators used by the NBER, but it is not the definition the organization uses to determine recessionary periods.

On the flip side, a business cycle recovery begins when that recessionary vicious cycle reverses and becomes a virtuous cycle, with rising output triggering job gains, rising incomes, and increasing sales that feedback into a further rise in output . The recovery can persist and result in a sustained economic expansion only if it becomes self-feeding, which is ensured by this domino effect driving the diffusion of the revival across the economy.

Of course, the stock market is not the economy. Therefore, the business cycle should not be confused with market cycles , which are measured using broad stock price indices.

Measuring and Dating Business Cycles

The severity of a recession is measured by the three D's: depth, diffusion, and duration. A recession's depth is determined by the magnitude of the peak-to-trough decline in the broad measures of output, employment, income, and sales. Its diffusion is measured by the extent of its spread across economic activities, industries, and geographical regions. Its duration is determined by the time interval between the peak and the trough.

An expansion begins at the trough (or bottom) of a business cycle and continues until the next peak, while a recession starts at that peak and continues until the following trough.

The National Bureau of Economic Research (NBER) determines the business cycle chronology—the start and end dates of recessions and expansions for the United States. Accordingly, its Business Cycle Dating Committee considers a recession to be "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales."

The Dating Committee typically determines recession start and end dates long after the fact. For instance, after the end of the 2007–09 recession, it "waited to make its decision until revisions in the National Income and Product Accounts [were] released on July 30 and Aug. 27, 2010," and announced the June 2009 recession end date on Sept. 20, 2010.

The average length of recessions in the U.S. since World War II has been around 11 months. The Great Recession was the longest one during this period, reaching 18 months.

U.S. expansions have typically lasted longer than U.S. contractions. From 1854–1899, they were almost equal in length, with contractions lasting about 25 months and expansions lasting about 29 months, on average. The average contraction duration then fell to 18 months in the 1900–1945 period and 11 months in the post-World War II period. Meanwhile, the average duration of expansions increased progressively, from 29 months in 1854–1899 to 30 months in 1900–1945, 43 months in 1945–1982, and 70 months in 1982–2009.

Stock Prices and the Business Cycle

The biggest stock price downturns tend to occur—but not always—around business cycle downturns (e.g., contractions and recessions). For example, the Dow Jones Industrial Average and the S&P 500 took steep dives during the Great Recession. The Dow fell 51.1%, and the S&P 500 fell 56.8% between Oct. 9, 2007 to March 9, 2009.

There are many reasons for this, but primarily, it is because businesses assume defensive measures and investor confidence falls during contractionary periods. Many events occur before those in an economy are aware they are in a contraction, but the stock market trails what is going on in the economy.

So, if there is speculation or rumors about a recession, mass layoffs, rising unemployment, decreasing output, or other indications, businesses and investors begin to fear a recession and act accordingly. Businesses assume defensive tactics, reducing their workforces and budgeting for an environment of falling revenues.

Investors flee to investments "known" to preserve capital, demand for expansionary investments falls, and stock prices drop.

It's important to remember that while stock prices tend to fall during economic contractions, the phase does not cause stock prices to fall—fear of a recession causes them to fall.

What Are the Stages of the Business Cycle?

In general, the business cycle consists of four distinct phases: expansion, peak, contraction, and trough.

How Long Does the Business Cycle Last?

According to U.S. government research, the business cycle in America takes, on average, around 6.33 years.

What Was the Longest Economic Expansion?

The 2009-2020 expansion was the longest on record at 128 months.

The business cycle is the time is takes the economy to go through all four phases of the cycle: expansion, peak, contraction, and trough. Expansions are times of increasing profits for businesses, rising economic output, and are the phase the U.S. economy spends the most time in. Contractions are times of decreasing profits and lower output, and is the phase the least amount of time is spent in.

St. Louis Federal Reserve. " All About the Business Cycle: Where Do Recessions Come From? "

The National Bureau of Economic Research. " Business Cycle Dating ."

National Bureau of Economic Research. “ Business Cycle Dating Procedure: Frequently Asked Questions. What is a Recession? What is an Expansion? ”

National Bureau of Economic Research. " The NBER's Recession Dating Procedure ."

National Bureau of Economic Research. " Business Cycle Dating Committee, National Bureau of Economic Research ."

National Bureau of Economic Research. " US Business Cycle Expansions and Contractions ."

Federal Reserve Bank of Atlanta. " Stock Prices in the Financial Crisis ."

Congressional Research Service. " Introduction to U.S. Economy: The Business Cycle and Growth ," Page 2.

• Depression in the Economy: Definition and Example 1 of 14
• What Is Economic Collapse? Definition and How It Can Occur 2 of 14
• Business Cycle: What It Is, How to Measure It, the 4 Phases 3 of 14
• Boom And Bust Cycle: Definition, How It Works, and History 4 of 14
• Negative Growth: Definition and Economic Impact 5 of 14
• The Great Depression: Overview, Causes, and Effects 6 of 14
• Were There Any Periods of Major Deflation in U.S. History? 7 of 14
• The Greatest Generation: Definition and Characteristics 8 of 14
• A History of U.S. Government Financial Bailouts 9 of 14
• Understanding Austerity, Types of Austerity Measures, and Examples 10 of 14
• The New Deal: Meaning, Overview, History 11 of 14
• The Economic Effects of the New Deal 12 of 14
• Gold Reserve Act of 1934: Meaning, History 13 of 14
• Emergency Banking Act of 1933: Definition, Purpose, Importance 14 of 14

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Business Cycles

Economies experience times of growth and times of recession. Learn more about these fluctuations known as business cycles.

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Publications on Business cycles

Keynes’s theories of the business cycle, evolution and contemporary relevance, some comments on the sraffian supermultiplier approach to growth and distribution, inequality update: who gains when income grows, reorienting fiscal policy, a critical assessment of fiscal fine-tuning.

The present paper offers a fundamental critique of fiscal policy as it is understood in theory and exercised in practice. Two specific demand-side stabilization methods are examined here: conventional pump priming and the new designation of fiscal policy effectiveness found in the New Consensus literature. A theoretical critique of their respective transmission mechanisms reveals that they operate in a trickle-down fashion that not only fails to secure and maintain full employment but also contributes to the increasing postwar labor market precariousness and the erosion of income equality. The two conventional demand-side measures are then contrasted with the proposed alternative—a bottom-up approach to fiscal policy based on a reinterpretation of Keynes’s original policy prescriptions for full employment. The paper offers a theoretical, methodological, and policy rationale for government intervention that includes specific direct-employment and investment initiatives, which are inherently different from contemporary hydraulic fine-tuning measures. It outlines the contours of the modern bottom-up approach and concludes with some of its advantages over conventional stabilization methods.

Growth Trends and Cycles in the American Postwar Period, with Implications for Policy

Do all types of demand have the same effect on output? To answer this question, I estimate a cointegrated vector autoregressive (VAR) model of consumption, investment, and government spending on US data, 1955–2007. I find that: (1) economic growth can be decomposed into a short-run (transitory) cycle gravitating around a long-run (permanent) trend made of consumption shocks and government spending; (2) the estimated fluctuations are investment dominated, they coincide remarkably with the business cycle, and they are highly correlated with capacity utilization in both labor and capital; and (3) the long-run multipliers point to a large induced-investment phenomenon and to a smaller, but still significantly positive, government spending multiplier, around 1.5. The results cover a lot of theoretical ground: Paul Samuelson’s accelerator principle, John Kenneth Galbraith’s stress on consumption and government spending, Jan Tinbergen's investment-driven business cycle, and Robert Eisner’s inquiries on the investment function. The results are particularly useful to distinguish between economic policies for the short and long runs, albeit no attempt is made at this point to inquire into the effectiveness of specific economic policies.

Weak Expansions

A distinctive feature of the business cycle in latin america and the caribbean.

Using two standard cycle methodologies (classical and deviation cycle) and a comprehensive sample of 83 countries worldwide, including all developing regions, we show that the Latin American and Caribbean cycle exhibits two distinctive features. First, and most important, its expansion performance is shorter and, for the most part, less intense than that of the rest of the regions considered; in particular, that of East Asia and the Pacific. East Asia’s and the Pacific’s expansions last five years longer than those of Latin American and the Caribbean, and its output gain is 50 percent greater. Second, the Latin American and Caribbean region tends to exhibit contractions that are not significantly different from those other regions in terms of duration and amplitude. Both these features imply that the complete Latin American and Caribbean cycle has, overall, the shortest duration and smallest amplitude in relation to other regions. The specificities of the Latin American and Caribbean cycle are not confined to the short run. These are also reflected in variables such as productivity and investment, which are linked to long-run growth. East Asia’s and the Pacific’s cumulative gain in labor productivity during the expansionary phase is twice that of Latin American and the Caribbean. Moreover, the evidence also shows that the effects of the contraction in public investment surpass those of the expansion, leading to a declining trend over the entire cycle. In this sense, we suggest that policy analysis needs to increase its focus on the expansionary phase of the cycle. Improving our knowledge of the differences in the expansionary dynamics of countries and regions can further our understanding of the differences in their rates of growth and levels of development. We also suggest that, while the management of the cycle affects the short-run fluctuations of economic activity and therefore volatility, it is not trend neutral. Hence, the effects of aggregate demand management policies may be more persistent over time, and less transitory, than currently thought.

The Household Sector Financial Balance, Financing Gap, Financial Markets, and Economic Cycles in the US Economy

A structural var analysis.

This paper investigates private net saving in the US economy—divided into its principal components, households and (nonfinancial) corporate financial balances—and its impact on the GDP cycle from the 1980s to the present. Furthermore, we investigate whether the financial markets (stock prices, BAA spread, and long-term interest rates) have a role in explaining the cyclical pattern of the two private financial balances. We analyze all these aspects estimating a VAR—between household and (nonfinancial) corporate financial balances (also known as the corporate financing gap), financial markets, and the economic cycle—and imposing restrictions on the matrix A to identify the structural shocks. We find that households and corporate balances react to financial markets as theoretically expected, and that the economic cycle reacts positively to corporate balance, in accordance with the Minskyan view of the operation of the economy that we have embraced.

Minsky Moments, Russell Chickens, and Gray Swans

The methodological puzzles of the financial instability analysis.

The recent revival of Hyman P. Minsky’s ideas among policymakers, economists, bankers, financial institutions, and the mass media, synchronized with the increasing gravity of the subprime financial crisis, demands a reappraisal of the meaning and scope of the “financial instability hypothesis” (FIH). We argue that we need a broader approach than that conventionally pursued, in order to understand not only financial crises but also the periods of financial calm between them and the transition from stability to instability. In this paper we aim to contribute to this challenging task by restating the strictly financial part of the FIH on the basis of a generalization of Minsky’s taxonomy of economic units. In light of this restatement, we discuss a few methodological issues that have to be clarified in order to develop the FIH in the most promising direction.

A Financial Sector Balance Approach and the Cyclical Dynamics of the US Economy

This paper investigates the relationship between asset markets and business cycles with regard to the US economy. We consider the Goldman Sachs approach (2003) developed to study the dynamics of financial balances.

By means of a small econometric model we find that asset market dynamics are fundamental to determining the long-run financial sector balance dynamics. The gap between long-run equilibrium values and the actual values of the financial balances help to explain the cyclical path of the economy. Among all financial sectors balances, the financing gap in the corporate sector shows a leading effect on business cycles, in a Minskyan spirit. The last results appear innovative with respect to Goldman Sachs’s findings. Furthermore, our econometric results are robust and quite stable.

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Research Cycle Process and Theory explained

Research Cycle: This article provides a practical explanation of the research cycle . The article begins with a list of the research stages and a list of questions that every researcher should ask themselves before and during the research process. After this introduction, you will find a detailed explanation about every phase of the research cycle, as well as tips and recommendations for starting researchers. Enjoy reading!

What is a research cycle?

A research cycle is a series of stages that guide the user through the process of conducting research. The cycle roughly consists of the following stages:

• Determining research methods
• Data collection
• Evaluating and analyzing data
• Reporting and documenting

These stages will be discussed later in this article, including a description of the tasks and results from each stage. Because every research project is unique, it is important to constantly ask yourself the following questions:

• What am I going to research?
• Why am I researching this?
• Who am I going to research?
• How am I going to conduct my research?
• Where am I going to conduct my research?
• When am I going to conduct my research?

Stages of the research cycle

Research is a vital process for gaining insights and discovering new information in a particular field. The research cycle involves several stages, including analyzing the problem , determining research methods , collecting data, analyzing and evaluating the data, reporting and documenting the findings, and repeating the process.

Figure 1 – Phases / Stages of the research cycle

Stage 1: Analyzing

The first stage of the research cycle is analyzing the problem or topic under investigation. Researchers need to define the research question, scope of the study, and background of the research topic, including its significance in the field.

This stage also requires a thorough review of existing literature and research and identifying any potential limitations. The definition of research questions is also part of this phase.

Stage 2: Determining Research Methods

The next stage is determining the research methods to be used, including research design, data collection methods, and data analysis techniques.

Researchers must select the most appropriate methods for their study based on the research question, data availability, the type of field research and time constraints.

Stage 3: Data Collection

The third stage involves collecting the data needed to answer the research question. Researchers must ensure that the data collection methods used are reliable and valid, and take into consideration ethical considerations such as obtaining informed consent from participants and maintaining confidentiality.

Stage 4: Evaluating and Analyzing Data

The fourth stage is evaluating and analyzing the data collected to answer the research question. This involves cleaning and organizing the data and conducting statistical analysis using appropriate software. The results of the analysis are then interpreted, and conclusions are drawn based on the findings.

Stage 5: Report and Document

The fifth stage is reporting and documenting the findings. Researchers must present the research question, methods, results, and conclusions in a clear and concise manner. The report must be well-organized and easy to read, and the findings presented in a way that is meaningful to the target audience. Researchers must also include a discussion of the study’s limitations and recommendations for future research.

Stage 6: Repeat

The final stage of the research cycle involves repeating the process to refine the research question and methods. Researchers may need to conduct additional studies to address any limitations or questions that arise from the initial study. This iterative process allows researchers to continually refine their methods and findings, leading to more accurate and reliable results.

In conclusion, the research cycle is a crucial process that requires careful consideration and planning. By following the research cycle, researchers can ensure that their studies are well-designed, valid, and reliable. This iterative process allows researchers to continually refine their methods and findings, contributing to the advancement of their field.

Research Methodology Bootcamp: Research Methods Simplified    More information

Research Cycle tips and recommendations for the starting researcher

For anyone just starting out in the world of research, it can be a daunting task to navigate. However, with the right approach and mindset, starting researchers can set themselves up for success. Here are some tips and recommendations for those just beginning their research journey:

Start with a clear research question

Before beginning any research project, it is important to have a clear research question in mind. This will help guide your research and keep you focused throughout the process.

Conduct a thorough literature review

It is important to research existing literature on your topic to ensure that your research question has not already been answered or explored. Additionally, a literature review can provide valuable insights and information that can inform your research design and methods.

Choose appropriate research methods interviews , or experiments. It is important to choose methods that are appropriate for your research question and can yield valid and reliable results. Collect and analyze data carefully

Data collection and analysis are crucial components of any research project. It is important to ensure that your data is collected accurately and analyzed using appropriate statistical techniques.

Communicate your findings effectively

Once your research is complete, it is important to communicate your findings clearly and effectively to your target audience. This can include writing reports or creating presentations that are well-organized and easy to understand.

Now It’s Your Turn

What do you think? Do you recognize the explanation about the research cycle? Do you recognize the cycle from times where you were working on a research topic, like your thesis? Do you think the cycle is complete and accurate as described? Or do you add new phases and elements to it? Which other tips and recommendations can you add?

Share your experience and knowledge in the comments box below.

More information

• Barick, R. (2021). Research Methods For Business Students . Retrieved 02/16/2024 from Udemy.
• Berman, P. S., Jones, J., & Udry, J. R. (2000). Research design . National Longitudinal Study of Adolescent Health.
• Fox, W., & Bayat, M. S. (2008). A guide to managing research . Juta and company Ltd.
• Verhoeven, N. (2007). Doing research. The Hows and Whys of Applied Research . Boom Lemma Uitgevers .

How to cite this article: Janse, B. (2023). Research Cycle Process . Retrieved [insert date] from Toolshero: https://www.toolshero.com/research/research-cycle/

Original publication date: 07/25/2023 | Last update: 01/02/2023

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Ben Janse is a young professional working at ToolsHero as Content Manager. He is also an International Business student at Rotterdam Business School where he focusses on analyzing and developing management models. Thanks to his theoretical and practical knowledge, he knows how to distinguish main- and side issues and to make the essence of each article clearly visible.

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Is the Boom-and-Bust Business Cycle Dead?

There is a growing view that the U.S. business cycle has changed (for better) in a more diversified economy. To some, that sounds like tempting fate.

• Share full article

By Talmon Joseph Smith

For much of modern history, even the richest nations have been subject to big perennial upswings and crashes in commercial activity almost as fixed as the four seasons.

Periods of economic growth get overstretched by increased risk-taking. Hiring and investment crest and fall into a contraction as consumer confidence wanes and spending craters. Sales fall, bankruptcies and unemployment rise. Then, in the depths of a recession, debts are settled, panic abates, green shoots appear, and banks begin lending more easily again — fueling a recovery that enables a new upswing.

But a brigade of academic economists and prominent voices on Wall Street are asking if the unruly business cycle they learned in school, and witnessed in practice, has fundamentally morphed into a tamer beast.

Rick Rieder, who manages about $3 trillion in assets at the investment firm BlackRock, is one of them.

“There is a lot of ink spilled on what type of landing we will see for the U.S. economy,” he wrote in a note to clients last summer — employing the common metaphor for whether the U.S. economy will crash or achieve a “soft landing” of lower inflation, slower growth and mild unemployment.

“But one point to keep in mind,” Mr. Rieder continued, “is that satellites don’t land and maybe that is a better analogy for a modern advanced economy” like the United States. In other words, dips in momentum will now happen within a steadier orbit.

And there is some evidence that the current spurt of economic growth may have not just months but several years to run, barring an external disruption (what economists call an “ exogenous shock ”) or a return of high inflation that prompts the Federal Reserve to push the economy into recession.

“Financial reporters and market strategists often argue about whether we are ‘early-cycle,’ ‘mid-cycle’ or ‘late-cycle,’” David Kelly, the chief global strategist at J.P. Morgan Asset Management, wrote in a March 11 note to investors that closely aligned with Mr. Rieder’s “satellite” thesis. “However, these perspectives are based on an outdated model of how the U.S. economy behaves.”

According to the National Bureau of Economic Research, the U.S. economy between the 1850s and the early 1980s experienced 30 recessions lasting an average of 18 months, with intervening periods of economic growth averaging only 33 months.

Helping drive this pattern, Mr. Kelly and other economists explain, were highly cyclical industries: Manufacturing and agriculture, now only a fraction of overall output, were once mainstays of the U.S. economy.

Today, manufacturing accounts for about $2.3 trillion of gross domestic product, employs about 12 million people and indirectly supports other local jobs. (Every manufacturing job, for instance, spurs seven to 12 new jobs in related industries, according to a McKinsey estimate.)

But the consumer-driven U.S. economy, mostly made up of services (health care, auto repair, nail salons, customer service, administration and so on), is almost $30 trillion in size. Uptrends and pullbacks in the production of goods have less impact now. The relative stability of total household spending in recent years is a key part of why the United States has avoided a recession.

America’s contemporary economy, Mr. Rieder argued in his note to clients, is less vulnerable to the boom-and-bust cycles of old — mainly because its prosperous consumers are service-oriented, less dependent than ever on factories or farms. Consumption spending makes up about 70 percent of the economy.

“Consumption doesn’t really adjust that dramatically without some major form of economic stress,” he added.

One piece of data in favor of Mr. Rieder’s “satellite” theory is the absence of any widespread weakness before the pandemic crippled economies worldwide.

That was consistent with a developing trend: Since the early 1980s, there have been only four recessions, lasting an average of nine months, with economic expansions averaging 104 months.

The current period of job growth is in its 40th month.

“You don’t want to jinx it,” Ann Harrison, the dean of the Haas School of Business at the University of California, Berkeley, said in an interview — noting that peak confidence in economic expansions frequently arrives right before their downfall. (Talk has picked up of a new “ Roaring Twenties ,” an era that didn’t end well.)

As ever, there are reasons to worry. The emergence and rapid growth of “shadow banks” operating in private markets with little oversight of their lending has concerned many economists and old-school regulators. And a range of industry insiders in commercial real estate say the negative effects of lower office occupancy rates — for local economies and government budgets — have only just begun.

Yet Mr. Kelly of J.P. Morgan lists various reasons that periods of U.S. economic growth may be elongated and less chaotic going forward. Federal deposit insurance, introduced after the Depression, sharply reduced bank panics and failures. Vastly improved information on inventory levels among goods-producing businesses, he said, has “tamed” the inventory cycle, preventing mismatches between supply and demand that can cause mass layoffs.

The rise of international trade, Mr. Kelly added, can often offset slowing domestic demand since businesses, enabled by the internet, can find customers throughout the globe. And the service sector’s growth, he concluded, has “made the economy more stable and, importantly, less sensitive to interest rates.”

Across the economics profession, many are not feeling as reassured.

When weighing recession risks, Thomas Herndon, a professor of economics at John Jay College of the City University of New York, doesn’t take much long-term solace in the growing sophistication of big business. There are, he said, “many, many, many causes” for downturns — some of which are not directly linked to financial instability.

Mr. Herndon noted the work of the 20th-century Polish economist Michal Kalecki, who argued that business leaders feel “undermined” by the maintenance of full employment. Using their substantial influence over policy, Kalecki argued, they can help institute restrictive economic policies that bring times of economic expansion to an end and reset them with softer, more tolerable labor power.

And Mr. Herndon said he thought old-fashioned “bubble” manias and “credit cycles” remained a danger, too.

Eliminating the longstanding economic cycle would be “the holy grail of central banking,” said James Knightley, chief international economist at ING, the global bank. “The Fed’s willingness to use innovative tools” — like its off-the-cuff creation of lending facilities to keep credit flowing on Main Street and heal bank balance sheets since 2020 — gives it “more levers to wiggle to help reduce the chance of a downturn,” Mr. Knightley said.

“Phrases like ‘This time it will be different’” generally have a bad track record, he said. “But maybe it will.”

In several ways, this time has been different so far.

Typically, the housing sector — and its interconnected industries, from construction and home improvement to real estate finance — accounts for nearly 20 percent of U.S. output . The Federal Reserve has more than quadrupled its interest-rate levels since the spring of 2022, bringing its key policy rate to over 5 percent from near zero. That drove mortgage rates to unaffordable highs and made financing new home building difficult. And the residential real estate sector, highly sensitive to interest rates, ground to a halt. But the economy as a whole continued to grow.

When in-person services plummeted during the pandemic, e-commerce and goods-buying picked up the slack. By the time millions of households were sated with goods purchases and manufacturing fell off, the in-person economy was reopening and in-person services began a booming recovery.

There are some market analysts, such as Jim Bianco of Bianco Research, who believe that the U.S. economy — in its dynamism, diversity and size — has in some respects begun to resemble the global economy itself, which typically contracts only when colossal shocks to output occur.

The global financial crisis and the Covid-19 pandemic — which were separated by only 10 years and did cause global recessions — show that while rare, such maelstroms can coincidentally occur back to back. So, long expansions are no guarantee. On the flip side, Australia went about three decades without a recession until Covid ended the streak .

Nina Eichacker, a professor of economics at the University of Rhode Island and the author of two recent papers about government responses to crises, cited another influence: a powerful school of thought that government interventions, even amid downturns, add “frictions and inefficiencies to markets” and “make us worse off overall.”

The robust federal response to the pandemic shock was enabled by a general view that it was an act of nature. Future financial stresses are more likely to have villains, which means proposed solutions are more likely to face division in Congress even if unemployment is notably rising.

But Ms. Eichacker thinks that those political limits to consensus may soften if this expansion rolls on and public opinion of the hefty federal response that helped foster it grows fonder.

“I am sometimes freaked out by how optimistic I feel about the state of things,” she said. “Economically anyway.”

Talmon Joseph Smith is a Times economics reporter, based in New York. More about Talmon Joseph Smith

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Business Cycles and the Dynamics of Innovation: a Theoretical Perspective

• Published: 04 March 2023

Cite this article

• Manzoor Ahmad   ORCID: orcid.org/0000-0002-5858-6994 1 ,
• Zahoor Ul Haq 1 &
• Shehzad Khan 2  

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This paper constructs a simple dynamic growth model and deducts four theoretical predictions: prediction I , new knowledge creations and research and development expenditures (R&DE) contribute to economic upturns and downturns; prediction II , the R&DE and new knowledge creations upsurge and fall in the economic expansions and contractions periods, respectively; prediction III , the research intensity and frequency of new knowledge creations increase and reduce during boom and recession periods, respectively; prediction IV , positive and negative shocks in R&DE and new knowledge creation are caused by changes in consumption, saving, R&DE, and innovation activities during economic boom and slump periods; and prediction IV , innovation and gross domestic product have a bidirectional causal nexus during trade cycles.

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The determinants of innovation performance: an income-based cross-country comparative analysis using the Global Innovation Index (GII)

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Intellectual property rights and R&D subsidies: are they complementary policies?

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Ahmad, M., Haq, Z.U. & Khan, S. Business Cycles and the Dynamics of Innovation: a Theoretical Perspective. J Knowl Econ (2023). https://doi.org/10.1007/s13132-023-01155-6

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A look at small businesses in the U.S.

Most U.S. adults (86%) say small businesses have a positive effect on the way things are going in the country these days, according to a recent Pew Research Center survey . Small businesses, in fact, receive by far the most positive reviews of any of the nine U.S. institutions we asked about, outranking even the military and churches.

Despite their name, small businesses loom large in the United States. These businesses – defined here as those with 500 employees or fewer – account for 99.9% of U.S. firms, according to the Small Business Administration . While most of these 33 million firms don’t have paid employees, about 6 million of them do . They account for just under half of total private sector employment (46%).

As National Small Business Week approaches, here’s a look at small businesses in the U.S. and public attitudes about them, based on federal data and Center surveys.

Pew Research Center conducted this analysis to provide a glimpse into the state of American small businesses ahead of National Small Business Week .

In this analysis, “small businesses” are defined as employer firms with fewer than 500 workers. The analysis relies primarily on data from several Census Bureau sources: the Annual Business Survey (ABS), the Business Dynamics Statistics (BDS), and the Business Formation Statistics (BFS).

The ABS – conducted annually since 2017 – includes all non-farm U.S. firms with paid employees and receipts of $1,000 or more. Majority business ownership is characterized in the survey as having 51% or more of the stock or equity in the firm. The Census Bureau counts multiracial firm owners under all racial categories they identify with; Hispanic firm owners may be of any race. Read more about the  ABS methodology .

Data on the age of small business comes from the BDS. Data on the annual number of high-propensity business applications in the United States is based on the number of Employer Identification Number applications used for tax purposes and is not seasonally adjusted. Read more about the BFS methodology . Per capita calculations use state-level resident population data from the Census Bureau; estimates are as of July 1, 2023.

This analysis also draws on findings from recent Center surveys. More information on the methodology for these surveys can be found by following the links in the text.

There’s no single way to define a “small business.” Economists sometimes use the size of the establishment or firm, or turn to industry-specific size standards based on average revenue. For this analysis, we’ve used the U.S. Small Business Administration’s broadest definition: employer firms with fewer than 500 workers .

An establishment is a business with one physical location. A firm is a business organization that may have multiple locations (i.e., multiple establishments).

Just how ‘small’ are small businesses ?

Among the roughly 6 million small businesses with employees, 49% have just one to four workers, according to the latest estimates for 2021 from the Census Bureau’s Annual Business Survey (ABS). About a quarter (27%) have between five and 19 employees; 8% have 20 to 99; and just 1% have 100 to 499 workers. The remaining 14% had paid employees at some point during the year, but not during the March 12 pay period, which the ABS uses to determine employment size.

Overall, small businesses employed an estimated 56.4 million workers in 2021 and brought in over $16.2 trillion in revenue, according to ABS data. Perhaps unsurprisingly, small businesses with more employees tend to account for larger shares of overall revenue than those with fewer workers.

Who owns and runs small businesses?

Some small businesses are family-owned, but the vast majority are not. Among small businesses that reported this type of information for 2021, 27% were family-owned and 73% were not.

So-called “mom and pop shops” account for a relatively modest share of small businesses for which information is available. Overall, 10% of small businesses in the U.S. were jointly owned and operated equally by spouses in 2021. Another 11% were jointly owned by spouses but separately operated, with men more likely than women to serve as primary operators.

Franchises aren’t very common among small businesses. Just 5% of small businesses that reported this information were fully or partially operated as franchises in 2021.

In terms of demographics, men own a greater share of small businesses overall. About six-in-ten small businesses (61%) were majority-owned by men in 2021, while 22% were majority-owned by women. Another 14% were owned equally by men and women. (The ABS defines majority ownership as having at least 51% equity in the firm.)

Looking at small businesses where estimates of majority owners’ race and ethnicity are available, most (85%) had majority-White ownership in 2021. Smaller shares were majority-owned by Asian Americans (11%), Hispanic adults (7%), and Black or African American adults (3%). About 1% were estimated to have either American Indian and Alaska Native, or Native Hawaiian and other Pacific Islander majority owners.

Related: A look at Black-owned businesses in the U.S.

Despite owning small shares of these firms overall, many Black and Asian Americans see entrepreneurship as a marker of success, according to Center surveys.

For example, 30% of Asian Americans say owning a business is important to their own view of the American dream, according to a Center survey conducted from July 2022 to January 2023 . And 36% of Black adults say owning a business is important to their personal definition of financial success, with another 22% saying it’s essential , according to a September 2023 survey .

Still, Black and Asian Americans are more likely to place emphasis on other measures asked about in these surveys, such as owning a home, having a good family life and being debt-free, among others.

How old are most small businesses?

Many small businesses have stood the test of time. In 2021, the majority of these firms (59%) had been operational for at least six years, according to the Census Bureau’s Business Dynamics Statistics . This includes 15% that had been in business for more than 25 years.

On the other end of the spectrum, about a third of small businesses (35%) had been running for five years or fewer in 2021, including 9% that had launched in the last year. (The bureau could not determine the age of the remaining 6% of firms.)

How often do new businesses open?

Small businesses have reported financial and staffing challenges in the years following the coronavirus pandemic . But federal data reveals the staying power of entrepreneurship in the U.S.

The number of high-propensity business applications – those that are highly likely to turn into businesses with payrolls – remained relatively stable between 2009 and 2019, according to Census Bureau data . But the number of applications has risen since before the pandemic: There were nearly 1.8 million high-propensity business applications in 2023, up from about 1.3 million in 2019.

On the state level, places with larger populations saw the most high-propensity business applications in 2023. Florida (225,809) topped the list, followed by California (221,571), Texas (151,888), New York (131,206) and Georgia (80,403). But Missouri, Wyoming, Delaware, Florida and Colorado had the most applications per capita that year.

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Majorities of adults see decline of union membership as bad for the U.S. and working people

A look at black-owned businesses in the u.s., from businesses and banks to colleges and churches: americans’ views of u.s. institutions, 2023 saw some of the biggest, hardest-fought labor disputes in recent decades, older workers are growing in number and earning higher wages, most popular.

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Research: More People Use Mental Health Benefits When They Hear That Colleagues Use Them Too

• Laura M. Giurge,
• Lauren C. Howe,
• Zsofia Belovai,
• Guusje Lindemann,
• Sharon O’Connor

A study of 2,400 Novartis employees around the world found that simply hearing about others’ struggles can normalize accessing support at work.

Novartis has trained more than 1,000 employees as Mental Health First Aiders to offer peer-to-peer support for their colleagues. While employees were eager for the training, uptake of the program remains low. To understand why, a team of researchers conducted a randomized controlled trial with 2,400 Novartis employees who worked in the UK, Ireland, India, and Malaysia. Employees were shown one of six framings that were designed to overcome two key barriers: privacy concerns and usage concerns. They found that employees who read a story about their colleague using the service were more likely to sign up to learn more about the program, and that emphasizing the anonymity of the program did not seem to have an impact. Their findings suggest that one way to encourage employees to make use of existing mental health resources is by creating a supportive culture that embraces sharing about mental health challenges at work.

“I almost scheduled an appointment about a dozen times. But no, in the end I never went. I just wasn’t sure if my problems were big enough to warrant help and I didn’t want to take up someone else’s time unnecessarily.”

• Laura M. Giurge is an assistant professor at the London School of Economics, and a faculty affiliate at London Business School. Her research focuses on time and boundaries in organizations, workplace well-being, and the future of work. She is also passionate about translating research to the broader public through interactive and creative keynote talks, workshops, and coaching. Follow her on LinkedIn  here .
• Lauren C. Howe is an assistant professor in management at the University of Zurich. As head of research at the Center for Leadership in the Future of Work , she focuses on how human aspects, such as mindsets, socioemotional skills, and leadership, play a role in the changing world of work.
• Zsofia Belovai is a behavioral science lead for the organizational performance research practice at MoreThanNow, focusing on exploring how employee welfare can drive KPIs.
• Guusje Lindemann is a senior behavioral scientist at MoreThanNow, in the social impact and organizational performance practices, working on making the workplace better for all.
• Sharon O’Connor is the global employee wellbeing lead at Novartis. She is a founding member of the Wellbeing Executives Council of The Conference Board, and a guest lecturer on the Workplace Wellness postgraduate certificate at Trinity College Dublin.

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Recent Work on Business Cycles in Historical Perspective: Review of Theories and Evidence

This survey outlines the evolution of thought leading to the rrecent delopments in the study of business cycles.The subject is almost coextensive with short-term macrodynamics and has a large interface withmeconomics of growth, money, inflation, and expectations.The coverage is therefore both very extensive , and selective. The paper first summarizes the "stylized facts" that ought to be explained by the theory.This part discusses the varying dimensions of business cycles; their timing, amplitude, and diffusion features; some international aspects; and recent changes. The next part is a review of the literature on "self-sustaining" cycles. It notes some of the older theories and proceeds to more recent models driven by changes in investment, credit, and price-cost-profit relations. These models are mainly endogenous and deterministic.Exogenous factors and stochastic elements gain importance in the part on the modern theories of cyclical response to monetary and real disturbances.The early monetarist interpretations of the cycle are followed by the newer equilibrium models with price misperceptions and intertemporal substitution of labor. Monetary shocks continue to be used but the emphasis shifts from nominal demand changes and lagged price adjustments to informational lags and supply reactions. Various problems arise, revealed by intensive testing and criticisms.This prompts new attempts to explain the persistence of'cyclical movements and the roles of uncertainty and financial instability, real shocks,and gradual price adjustments. One conclusion is that business cycle research will profit most from (a)the updating of findings from the historical and statistical studies, and (b)using the results to eliminate inconsistencies with the evidence and to move toward a realistic synthesis of the surviving elements of the extant theories.

• Acknowledgements and Disclosures

MARC RIS BibTeΧ

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Zarnowitz, Victor. "Recent Work on Business Cycles in Historical Perspective: Review of Theories and Evidence." Journal of Economic Literature, Vol . 23, No. 2, (June 1985), pp. 523-580.

Victor Zarnowitz, 1992. "Recent Work on Business Cycles in Historical Perspective," NBER Chapters, in: Business Cycles: Theory, History, Indicators, and Forecasting, pages 20-76 National Bureau of Economic Research, Inc.

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