What is a primary indicator that an economy is in an expansion phase?

An increase in employment is a primary indicator that an economy is in an expansion phase because it reflects a growing economy where businesses are hiring more workers due to higher consumer demand and increased production. During an expansion, businesses experience an uptick in sales and production levels, leading them to require more labor to meet this demand. As employment rises, it typically results in higher incomes, which further fuels consumer spending and economic growth. This cycle of increased employment and spending helps to sustain the expansion phase of the economic cycle, indicating positive economic health and optimism among businesses and consumers alike.

In contrast, a decrease in trade, a drop in stock prices, or a reduction in consumer spending would typically indicate economic contraction or stagnation, rather than expansion, as these trends suggest weakening economic activity and lower consumer confidence.