Expansion
Plain definition
An expansion is the phase of the business cycle in which real economic activity rises: output grows, employment increases, incomes climb, and business investment typically strengthens. It runs from a trough to the next peak.
In economics
Expansions are when most job creation happens and household incomes rise, so they are the phase governments and central banks want to sustain. They also generate the conditions for the next downturn: tight labor markets can push wages and inflation up, asset prices can overshoot, and credit can expand excessively — all reasons policymakers watch expansions for overheating.
Example
The U.S. expansion from mid-2009 to early 2020 — the longest on record at about 128 months — saw unemployment fall from 10% to 3.5% and real GDP grow steadily. It ended not from internal overheating but from the external shock of the COVID-19 pandemic, showing expansions can die from causes other than old age.
Expansion is often confused with recovery or boom. Recovery is the early part of an expansion just after a trough (rapid catch-up growth); the expansion continues until the peak. And expansion does not mean every sector grows — some industries can decline even while the overall economy expands.