Recovery
The phase following a trough in which activity begins rising again toward and past its previous peak.
How it is identified
Test: real GDP is rising from a trough, though it may still be below the prior peak
Unit
qualitative
In depth
Recovery is the phase in which the data is still poor while the direction has turned, which is why it feels least like an upturn while it is happening. Unemployment typically continues rising for some months into a recovery because firms delay hiring until demand is proven — the lagging indicator problem. Growth rates look spectacular during recovery purely because of the low base, which flatters year-on-year comparisons without indicating strength. Markets generally rise fastest in this phase, before the recovery is confirmed in the data.
Worked example
A quarter showing 8.2% growth against one that contracted 3% a year earlier has recovered to only 4.9% above the level two years before — a two-year compound rate of 2.4%, not 8.2%.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Recovery” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.