The business cycle is a repeated five-stage sequence of growth, stagnation and decline in a free-enterprise economy.
Traditionally, the stages of the business cycle are growth, peak, recession, trough and recovery. Growth leads to a peak, which is followed by recession, a period of decline leading to a trough. The trough is the bottom of the cycle, followed by a recovery which eventually leads to a period of growth.
The stage of the cycle is identified by fluctuations in gross domestic product (GDP), production, trade and activity in the financial sector. A full cycle, at least since the end of the second World War, lasts three-to-five years.