The Business Cycle

Initial Recovery

• Duration of a few months
• Business confidence is rising
• Government stimulation is provided by low interest rates and/or budget deficits (OBAMA!)
• Falling inflation
• Low or falling short-term interest rates
• Bond yields have bottomed out
• Rising stock prices

Early Expansion

• Duration of a year to several years
• Increasing growth with low inflation
• Increasing confidence
• Increasing inventories
• Rising short-term interest rates
• Flat or rising bond yields
• Rising stock prices

Late Expansion

• Confidence and employment are high
• Inflation increases
• Central bank limits the growth of the money supply (yeah, right)
• Rising short-term interest rates
• Rising bond yields
• Rising stock prices, but risk increases with investor nervousness

Slowdown

• Duration of a few months to a year or longer
• Declining confidence
• Inflation still rising
• Falling inventory levels
• Short-term interest rates at a peak
• Bond yields have peaked and may be falling
• Falling stock prices

Recession

• Duration of six months to a year or the entire Obama presidency
• Large declines in inventory
• Declining confidence and profits
• Inflation tops out
• Falling short-term interest rates
• Falling bond yields
• Stock prices increase in later stages

What an arbitrary predicting-the-past concept.