I am taking a Managerial Economics class right now and we are studying about recessions. For a recent assignment, we looked at some of the key metrics of the economy dating back to 1967. The numbers we looked at were Real GDP, Unemployment Rate, and Housing Starts. Over the spread of the years we pulled out the current rate, the max rate, and the min rate. Here are the numbers we found:
% change in Real GDP (Quarterly)
Current: -0.5% (2008 Q3)
Max: 16.7% (1978 Q2)
Min: -7.8% (1980 Q2)
Source
Unemployment Rate (Monthly)
Current: 7.2% (2008 Dec)
Max: 10.8% (1982 Nov-Dec)
Min: 3.4% (1968 Sep - 1969 May)
Source
Housing Starts (Annually) (1978 - 2008)
Current: 625,000 (2008 Nov)
Max: 2,068,300 (2005)
Min: 1,013,900 (1991)
Source
(These lines are annual averages, which is why the max, min, and current values don’t appear on the graph)
These are just numbers. I don’t have any commentary to add to them since I’m still trying to figure out what they mean. I simply provide them as a reference point when you listen to people discuss the economy. It’s good to know where we currently stand and how things have been in the past.
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I’m not sure I totally understand, but this appears to indicate that this is NOT the worst recession since the Great Depression as I am being told by politicians and the media.
Are they referring to other economic data such as total losses in the stock market or something else?
I wanted to get data going back to the Great Depression, but it wasn’t available to me (without more digging). I realize that I just threw numbers out there without any explanation. Our professor agreed with the media that this is the worst recession since the GD. I’m not exactly sure what to make of these numbers, but did find it interesting that the unemployment rate isn’t as high as it was in the early 80’s. Our professor made this analogy when using these numbers to predict the future of the economy. It’s like driving down the freeway and having your hood fly up on your windshield. Since you can’t see out the front, you look in your rearview mirror and follow the yellow line behind you. It’s pretty hard to predict turns that way.
(By the way, the yellow line on the graph is the annual average of the unemployment rate. That’s why you don’t see the Max, Min, and Current values represented on the graph.)
The housing starts number is pretty crazy. It’s so far below the prior minimum.
Yeah, housing starts are really low. If you go to the source for that stat, the page shows a projection that the number will be back over 1 million this year.
The Q4 08 GDP decline will be interesting. -0.5% in Q3 doesn’t look too bad compared to the worst, but they are expecting close to -5.0%. That makes things seem a lot worse. All these are lagging indicators though. Manec was my 2nd favorite class in college. Loved it.
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What was your favorite class, Jason?
Personal finance. Hands down the best class I ever took. An elective that should be required of all majors and should be required in high school.
[...] The numbers we looked at were Real GDP, Unemployment Rate, and Housing Starts. Over the spread of the years we pulled out the current rate, the max rate, and the min rate. Here are the numbers we found:. % change in Real GDP (Quarterly) …[Continue Reading] [...]
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