Today

1
Todays Economic SituationThe Great Recession,
The Recovery, Where We (May Be)
Going?Principles of Macroeconomics7/20/12
2
Todays Agenda
3
Todays Agenda

• Where We Are Today
• Historical Perspective
• Reasonable Expectations for the Future
• Summary

4
Headlines
5
Historical 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
6
The 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

7
The Great Recession Employment
8
NY Times Headline
9
Great 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
10
The Recession is over?
11
The Recession is over?
12
The 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

13
Total Private Employment U.S.
14
Total Private Employment - Ohio
15
Employment - Change
16
Unemployment Ohio/National
17
Unemployment Youngstown/U.S.
18
Unemployment by level of education
19
How large is the output gap?
20
Jobless Recovery?
21
Manufacturing
22
Exports
23
Corporate Profits
24
Stock Market
25
Encouraging Sign for the Future
26
What has not reboundedHousing Prices
27
What has not reboundedConstruction Spending
28
What has not reboundedFirm borrowing
29
Household Debt
30
Real Wages
31
Total Factor Productivity
TFPMeasure of output changes not caused by
observable inputs (labor and capital). Tells us
how economy changes as a result of technology
32
Why It Matters Its very closely tied to
median family income
33
Source Bureau of Economic Analysis
Federal Reserve Board, FOMC Minutes ,
34
Projections for the future Employment
35
Inflation Projections
36
Good News for You!
37
Summary

• 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.

38
LEST WE FORGET THE TREND!U.S. Per Capita Income
past 100 years
39
(No Transcript)
40
(No Transcript)