lect09012009 - 9/1/2009 2:28 PM Outline – September 1,...

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Unformatted text preview: 9/1/2009 2:28 PM Outline – September 1, 2009 Economic Problems & Issues Economic Real GDP Growth Real Unemployment Unemployment Inflation & Deflation Inflation Definition of GDP Annual Value of Final goods & services Produced Today’s Economy Today’ Announcements sent by e-mail e- In an economy 2 GDP: Out and In In pairs or triplets: In 2 things not counted in GDP that some people things not might think would be counted Figure 1.2 - Long-Run Economic Growth: Long-Run LongSweden and Argentina, 1900-2004 1900-2004 1900- 2 things counted in GDP things 3 4 1 9/1/2009 2:28 PM Real GDP Growth 1960s 1970s 1980s 1990s 2000-04 2005 2006 2007 2008 2009:I 2009:II 4.4 % 3.3 % 3.1 % 3.1 % 2.4% 2.9 % 2.7 % 2.1 % 0.4% -6.4% -1.0% Components of GDP Consumption Consumption Investment Investment Government Government Net Exports Net 5 6 Components of GDP Unemployment Unemployed Unemployed Out of work Out Looking for work Looking Labor Force = Labor Unemployment rate = Unemployment 7 8 2 9/1/2009 2:28 PM Unemployment Rate 1970s 1980s 1990s 2000-04 2005 2006 2007 2008 Jan-Jul 2009 Jul 2009 6.2 % 7.3 % 5.8% 5.2% 5.1 % 4.6 % 4.6 % 5.8 % 8.8 % 9.4 % 9 Unemployment Varies by Group Comparison: Overall, July 2009 = 9.4% Comparison: H.S. dropout = 15.4% H.S. H.S. diploma = 9.4% H.S. B.A. or more = 4.7% B.A. White men, age 20+ = 9.1% White White women, age 20+ = 6.8% White Black men, age 20+ = 15.8% Black Teens = 23.8% Teens 11 Inflation & Deflation Rate 1970s 1980s 1990s 2000-04 2005 2006 2007 2008 2009 CPI (Dec to Dec) 7.1 % 5.0 % 3.0 % 2.6 % 3.4 % 3.2 % 2.8 % 3.8 % -1.9 % (July - July) 12 3 9/1/2009 2:28 PM U.S. Federal Budget Deficit 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009est 2010est 2011est + $236 billion + $128 billion – $158 billion – $378 billion – $413 billion – $318 billion – $248 billion – $162 billion – $459 billion – $1,667 billion – $1,139 billion – $693 billion 14 Interest Rates 1980s 1990s 2000-04 2005 2006 2007 2008 Jul 2009 3-mo 8.85 % 4.88 % 2.66 % 3.16 % 4.73 % 4.36 % 1.37 % 0.18 % 10-yr 10.59 % 6.67 % 4.79 % 4.29 % 4.80 % 4.63 % 3.66 % 3.56 % Household Saving Rate 1960s 1970s 1980s 1990s 2000-04 2005 2006 2007 2008 2009 Jul 8.3 % 9.6 % 9.1 % 5.2 % 2.1 % 0.4 % 0.7 % 0.6 % 1.8 % 4.2 % 15 16 4 9/1/2009 2:28 PM Recession & Recovery Definitions Definitions Recession – when output is declining Recession Recovery – when output is rising Recovery Collectively, we saved nothing How so? How Credit. Credit. Credit cards are minor part of the story Credit Home equity lines of credit are the key Home “End of recession” recession” “In Recovery” Recovery” Consumers can’t lead us out of this recession Consumers can’ 17 18 5 9/1/2009 2:28 PM Labor Productivity Growth Rate 1960s 1970s 1980s 1990s 2000-04 2005 2006 2007 2008 2009:II all nonfarm business 2.8 % 1.9 % 1.0 % 1.8 % 3.5 % 1.7 % 0.9 % 1.8 % 1.8 % 1.8 % manufacturing only 2.8 % 2.9 % 2.8 % 3.7 % 4.2 % 4.8 % 1.0 % 3.2 % 0.8 % -1.3 % 22 Income Inequality 2007 2000 1990 1980 top 20% Income Above Share 47.3 % $112,638 47.7 % $110,017 44.3 % $94,564 41.1 % $83,372 Share 4.1 % 4.3 % 4.6 % 5.3 % bottom 20% Income Below $27,864 $28,897 $25,907 $24,916 Share of Income Received by Each 20% of Families, 1980 Share of Income Received by Each 20% of Families, 2007 Bottom 20% 4% Second 20% 10% Middle 20% 16% Bottom 20% 5% Second 20% 12% Top 20% 41% Middle 20% 18% Top 20% 47% Fourth 20% 24% Fourth 20% 23% 24 6 9/1/2009 2:28 PM Real Median Family Income 2007 2000 1990 1980 1970 $61,355. $61,083. $54,369. $50,366. $47,019. (+0.06% annually since 2000) (+1.2 % annually since 1990) (+0.8 % annually since 1980) (+0.7 % annually since 1970) (+3.2 % annually since 1960) 2007 2000 1990 1979 Poverty Rates Female-headed families 28.3 % (4.1 million) 26.4 % (3.5 million) 33.4 % (3.8 million) 30.4 % (2.6 million) All families 9.8 % (7.6 million) 9.2 % (6.8 million) 10.7 % (7.1 million) 9.2 % (5.5 million) People in poverty 12.5 % (37.3 million) 11.3 % (31.6 million) 13.5 % (33.8 million) 11.7 % (26.3 million) 25 26 7 ...
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