Which phase of the business cycle is characterized by a decline in economic activity?

The phase of the business cycle that is characterized by a decline in economic activity is known as a recession. During a recession, economic indicators such as GDP, employment rates, and consumer spending typically decline. This phase reflects a general slowdown in economic performance, leading to challenges for businesses and often resulting in reduced consumer confidence.

In this phase, businesses may face lower sales, which can lead to cuts in production and staffing. As a result, the negative effects of a recession can create a feedback loop, as decreased spending leads to further economic contraction. Understanding recessions is crucial for hospitality and lodging businesses, as consumer travel and spending patterns tend to change significantly during these periods.

In contrast, phases like expansion indicate growth, while a trough represents the lowest point before recovery begins. Recovery signifies a rebound in economic activity following a recession. Each of these phases plays a vital role in the overall business cycle and impacts strategic planning within industries, including hotel and lodging management.