when the economy needs a lift policymakers try to lower borrowing costs encouraging businesses and consumers to spend more when the federal reserve fed cuts interest rates saving is no longer favorable and the expansion phase begins money flows freely through the economy companies take on loans to fund expansion job prospects improve and consumer spending rockets 
eventually the cheap flow of money and subsequent increase in spending will cause inflation to rise leading central banks to hike interest rates suddenly the onus is on encouraging people to rein in on spending and moderating economic growth company revenues fall share prices decline and the economy contracts again several economists including irving fisher note that cycles move in tandem with company attempts to match ever changing consumer demand when the economy is growing customers are buying and borrowing costs are cheap management teams regularly seek to capitalize by ramping up production at first this leads to higher sales and decent returns on invested capital roic later the competition gets fiercer and greed takes its toll eventually supply outstrips demand prices fall early debt binges become more difficult to service and companies are left with no choice but to lay off staff 