Final answer:
A decrease in investments in U.S. businesses typically indicates a contraction phase of the business cycle. A contraction follows a peak and lasts until a trough, resulting in higher unemployment and increased enrollment in social welfare programs. Conversely, an expansion follows a trough and leads to decreased unemployment and lower reliance on these programs.
Step-by-step explanation:
When there is a decrease in investments in U.S. businesses, it typically reflects the contraction phase of the business cycle. A contraction, or a recession, begins after the economy reaches a peak of activity and continues until the economy hits its trough. During a contraction, indicators such as employment, production, and retail sales fall. This leads to an increase in unemployment and consequently, a rise in enrollment in social welfare programs such as TANF (Temporary Assistance for Needy Families), SNAP (Supplemental Nutrition Assistance Program), and Medicaid.
Conversely, during the expansion phase, economic activity increases from the trough towards the next peak. Unemployment rates decrease, which often results in a decreased reliance on social welfare programs such as TANF, SNAP, and Medicaid. Expansions, which follow troughs, can vary in length and are times of economic growth and increasing prosperity.
The National Bureau of Economic Research (NBER) tracks these cycles, noting that recessions last from peak to trough, while expansions occur from trough to peak. Understanding these phases is crucial for policymakers, businesses, and individuals in preparing for and responding to economic changes.