An expansion within an economy is a phase of the business cycle that goes from trough to peak. It is defined by at least two consecutive quarters of GDP growth. Expansions can last a few months to over a decade.
During an expansion, life is good. Businesses are ramping back up and hiring people, unemployment is low, money is cheap to borrow, and the stock market is rising. Because borrowing costs are low, businesses and consumers borrow and spend more, fueling the expansion. The Federal Reserve will usually cut interest rates at the beginning of an expansion, reducing interest on savings and driving consumers into the stock market for better returns.
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