what economic measurement helps to define when business cycles begin and end?
The economic measurement that helps define the start and end of business cycles is real Gross Domestic Product (GDP). Real GDP tracks the total value of goods and services produced in an economy, adjusted for inflation, and is the primary indicator used to identify expansions (growth) and contractions (declines).
However, in practice, organizations like the National Bureau of Economic Research (NBER) in the U.S. use a broader set of metrics—including employment, industrial production, income, and retail sales—to officially date business cycle turning points. While real GDP is central, the NBER's holistic approach ensures accuracy, as business cycles reflect more than just output (e.g., labor market health). Nonetheless, two consecutive quarters of declining real GDP is a common rule-of-thumb for defining a recession.
Short answer: Real GDP is the key measurement, but official determinations often incorporate additional indicators.
Comments
Post a Comment