What characterizes an economic expansion?

An economic expansion is characterized by an increase in economic activity, which includes a rise in consumer spending. During this phase, businesses typically experience growth in production and sales, leading to higher employment levels as companies hire more workers to meet the growing demand for goods and services. Increased consumer spending drives more demand in the economy, often resulting in improvements in overall economic indicators such as Gross Domestic Product (GDP).

Consumer confidence tends to be higher during an expansion, which motivates people to spend more on various goods and services, further stimulating economic growth. As businesses respond to increased demand, investment in capital also tends to rise, which can lead to further job creation and an overall strengthening of the economy. In summary, an economic expansion is marked by a robust increase in economic activity and consumer spending, contributing to a virtuous cycle of growth.