Business cycles are recurring periods of recession and prosperity which are widespread throughout a nation and which feed upon themselves. They must be distinguished from seasonal variations (lack of sales of coats in the summer) and long run secular trends (especially related to population, e.g. baby boom). The phases of a business cycle are peak, contraction, recession, trough, recovery, and expansion.
The existence of a business cycle can be best observed in the number of people who are laid off and have a difficult time to find a job. During peak periods of economic activity, this is less likely to happen. But, in period of recession, this is very common.