The lowest point, and therefore the end, of a contraction phase is called the trough.

The lowest point, and therefore the end, of a contraction phase is called the trough 📉

This is when the economy has contracted as much as it's going to and is ready to start growing again 📈

Predicting exactly when the trough is coming is hard – if it were easy to time the bottom then everybody would be rich!

But there are some key indicators that may indicate the trough is near:

1️⃣ The pace of job losses slows and unemployment claims start to decline 📋

2️⃣ Companies’ growth and profits begin increasing 🏭

3️⃣ Consumer expectations and sentiment shows signs of improvement 🏠

One classic example is the trough after the Great Recession in March 2009 📅

The stock market hit its bottom on March 9th, and by July the economy had officially started growing again 📈

Of course, not every contraction, trough or recovery looks the same and the COVID-19 recovery had its own unique dynamics 🦠

The key is to stay attuned to the economic data, stay disciplined and be ready to pivot to your expansion strategy as the recovery unfolds 🎯

Test your knowledge

A trough means the economy has reached its ____ point of a business cycle.

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Signs that a trough may be near include:

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Timing the trough is:

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The Great Recession’s trough occurred in:

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Positioning your portfolio for the trough can help you:

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What's next?

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