What is the trough in economic terms?

The trough is defined as the lowest point of a recession in economic terms. It represents the stage in the business cycle where economic activity has decreased significantly, leading to the lowest levels of output, employment, and income before the economy begins to recover and move toward expansion. This phase often follows a period of declining growth, and identifying the trough is essential for economists as it signals the end of the recession and the beginning of recovery.

Understanding the trough is crucial because it provides insight into the economic cycle, helping policymakers and businesses anticipate recovery and make strategic decisions. Recognizing when the trough has occurred allows for planning around potential growth and investment opportunities as consumer demand starts to rise again, leading into the next phase of the business cycle.