Using the business cycle pattern in which of the four stages

Using the business cycle pattern, in which of the four stages is the current state of economy? Can you identify any changes in consumer buying power that would affect the sale and use of your product.

Solution

There are four business cycles. They are the expansion phase, the peak, the contraction phase and the trough. Since 2009, USA has been having an expansionary phase which is not the ideal length of time that a country is in an expansionary phase. Usually, a country reaches its peak within 6-7 years of the expansionary phase. This is the reason, most economists are giving warning signals of a recession being round the corner. However, this is a different scenario where although the economy has seen expansion, it hasnt seen a significant rise in inflation. Hence, it is expected that this phase shall continue for some more time.

With the rise of online giants like Amazon, the consumers have increased their bargaining power at least in the case of retail goods. Companies like Amazon provide goods at a much cheaper price and often launch season sales offers where the sell products at even greater discounted price which puts pressure on the offline retailers to reduce their price. This has led to a fall in consumer demand for such retail goods from offline stores and has also reduced the margines of the offline business as managers try to get demand by providing goods at a lower price than before.