Title: Today
1Todays Economic SituationThe Great Recession,
The Recovery, Where We (May Be)
Going?Principles of Macroeconomics7/20/12
2Todays Agenda
3Todays Agenda
- Where We Are Today
- Historical Perspective
- Reasonable Expectations for the Future
- Summary
4Headlines
5Historical Perspective
Recession Year Peak Unemployment Trough of GDP change Duration (months)
2001 6.4 -0.6 8
1990 7.1 -1.2 8
1981 10.8 -3.4 16
1980 7.8 -2.4 6
1973 9.0 -4.3 16
Average 7.0 -2.3 10.8
6The Great Recession
- Worst since the Great Depression.
- Duration 18 months (Dec 2007-June 2009)
- 7 months longer than average
- Peak Unemployment 10.2
- 3.2 worse than average
- Trough GDP change -4.1
- 1.8 worse than average
7The Great Recession Employment
8NY Times Headline
9Great Recession vs. Great Depression
Great Depression (1929 1933) Great Recession (2007 2009)
GDP Growth () -29 -4.2
Unemployment () 25 10.2
Inflation () -25 2
DJIA Change () -89 -54
Bank Failures () 9,096 (50 of total) 137 (1 of total)
9
10The Recession is over?
11The Recession is over?
12The recession is over?
- Officially ended in June 2009.
- Means the worst (trough) is over, does not mean
the pain is over! - We had two consecutive quarters of GDP growth.
- Still have unemployment of 8.3, 14 million
unemployed workers. - Lots of major economic/social issues
13Total Private Employment U.S.
14Total Private Employment - Ohio
15Employment - Change
16Unemployment Ohio/National
17Unemployment Youngstown/U.S.
18Unemployment by level of education
19How large is the output gap?
20Jobless Recovery?
21Manufacturing
22Exports
23Corporate Profits
24Stock Market
25Encouraging Sign for the Future
26What has not reboundedHousing Prices
27What has not reboundedConstruction Spending
28What has not reboundedFirm borrowing
29Household Debt
30Real Wages
31Total Factor Productivity
TFPMeasure of output changes not caused by
observable inputs (labor and capital). Tells us
how economy changes as a result of technology
32Why It Matters Its very closely tied to
median family income
33Source Bureau of Economic Analysis
Federal Reserve Board, FOMC Minutes ,
34Projections for the future Employment
35Inflation Projections
36Good News for You!
37Summary
- Recovery is not as strong as we would like, but
many encouraging signs. - Leading indicators remain strong. Manufacturing,
Exports, and Investments have all grown
substantially. Consumer debt has declined. - Inflation is not an issue.
- Projections for solid GDP and employment growth.
- Real GDP growth between 3-4/yr., unemployment
declines between 1.5-2/yr. - Recoveries take time (especially after a
financial crisis). - This recovery is stronger than previous (2003)
recovery - If history is a guide, the growth during the
recovery will be greater than the decline during
the Recession.
38LEST WE FORGET THE TREND!U.S. Per Capita Income
past 100 years
39(No Transcript)
40(No Transcript)