The Four-Phase Model
Economies do not grow in a straight line. They move through four recurring phases: expansion (rising output, employment, and confidence), peak (maximum activity before momentum fades), contraction (falling output, tightening credit, rising unemployment), and trough (minimum activity, before recovery begins). This cycle repeats because investment and credit overshoot in both directions — too much optimism fuels excess, too much fear deepens the downturn. Recognising the current phase provides context for why asset prices, interest rates, and sector performance are moving the way they are.
See this in P2: P2's Business Cycle page shows the current phase, confidence score, and trajectory for each of the 7 regions. The phase label (Expansion / Peak / Contraction / Trough) and the trajectory arrow are the primary outputs. Historical phase timelines are shown below the current reading.Open →