A new resource model o f economic cycle is proposed. It is shown that the hidden resource overuse used in GDP production is an initial driving force o f economic cycles. The resource overuse is a result o f cumulative market imperfections caused by various market conditions and embodied in the gap between calculated natural and actual market price deflators. Total efficiency o f the regulatory policy can be evaluated by the size o f this gap. This enables feedback between actions o f the regulator and their impact on the economy. The resource model was empirically tested on the USA economy using a period o f 40 years or six empirical business cycles in a row. The model allows us to identify andforecast recession with the lead period 6 to 18 months. Empirical testing o f the resource model reveals the absence o f false signals when recession starting points forecasting.