ENG1022 Topic 2 · 2012. 10. 3. · Title: ENG1022 Topic 2 Keywords ()
SPP1 topic 2
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Transcript of SPP1 topic 2
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SPP1 topic 2XiaoZhen Chen
Hai TranNg Man
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Recession
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What is a recession? A Recession is a period of general economic
decline; typically defined as a decline in GDP for two or more consecutive quarters.
A Recession is typically accompanied by a drop in the stock market, an increase in unemployment, and a decline in the housing market.
Recession
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Recession is a significant decline in activity across the economy, lasting longer than a few months.
Recession is a normal (albeit unpleasant) part of the business cycle; however, one-time crisis events can often trigger the onset of a recession.
Recession definition con’t
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A Recession is generally considered less severe than a depression, and if a recession continues long enough it is often then classified as a depression.
There is no one obvious cause of a recession, although overall blame generally falls on the federal leadership, often either the president himself, the head of the Federal Reserve, or the entire administration.
Recession definition con’t
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When did the recent recession begin? According to CNN.com. The National Bureau
of Economic Research declares that the recession begin Dec,2007.
Recession--Begin
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When did the recent recession end? The recession officially ended in June 2009,
according to the Business Cycle Dating Committee of the National Bureau of Economic Research, the official arbiter of such dataes.
Recession-End
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GDP declines House market collapse: Falling housing
prices and sales Industrial output and sales declines Drop-off in business investment Slowdown in retail sales Banks collapse Many company out of business cause high
unemployment
Recession—Why recession in 2007
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Job lost, unemployment increase. Oil shock. Job losses and employer cutbacks in hours
worked, was sufficient to cause the level of payroll employment to erode enough so that the start date of recession was pushed up to November-December 2007, some four to five months sooner than it might have done otherwise as the outcome of the oil shock.
Recession—Reason why there is a recession in 2007 con’t
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Reason that show the end of Recession. According to the committee, such indicator as
gross domestic product and industrial production appear to have bottomed out in June 2009
The committee determined that a trough in business activity occurred in the U.S. economy in June 2009
The committee said that the trough marks the end of the recession that began in December 2007 and the beginning of an expansion.
Recession—Reason to end
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The committee determine that a trough occurred in June 2009, and determined only that the recession ended and a recovery began in that month.
The trough marks the end of the declining phase and the start of the rising phase of the business cycle.
Recession—Reason to end Con’t
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The NBER committee made its determination after considering numerous economic data and concluding that several key measures of economic activity — including total output and industrial production — pointed to June 2009 as the trough of that business cycle.
Recession-Reason to end con’t
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The economy started growing again in the July-to-September quarter of 2009, after a record four straight quarters of declines. Thus, the April-to-June quarter of 2009, marked the last quarter when the economy was shrinking. At that time, it contracted just 0.7 percent, after suffering through much deeper declines. That factored into the NBER's decision to pinpoint the end of the recession in June.
Recession-Reason to end Con’t
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Recession—Reason to end Con’t
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Recession—Reason to end Con’t
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Recession—Reason to end Con’t
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Recession—Reason to end Con’t
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Recession—Reason to end Con’t
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According to the above graphs, we could see that GDP, Personal income, Industrial production index, Retail sales and food services and employees are slightly change to positive in Mid 2009.
Recession—Reason to end Con’t
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Recent Recession
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The demand for new homes during recession.
Recent Recession—Demand New Homes
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Recent Recession—Demand for new homes
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Recession—Demand for new homes
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According to the graph, the demand for the new homes is decreasing during the recent recession(2007-2009)
Recent Recession—demand for new homes
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Demand for existing homes
Recession—Demand for existing homes
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Recession—Demand for existing homes
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According to the graph, we could see that the sale of existing home is decreasing during recession, although it has a slightly change to increase during 2008 but it falls again quickly in 2008 to decrease on sale of the existing homes during recession. (2007-2009)
Recession—Demand for existing homes
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Supply of new homes
Supply of new homes
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Supply of new homes Con‘t
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According to the above data, the supply of new homes seems to increase during recent recession. (2007-2009)
Supply of new homes con’t
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Supply of existing homes
Supply of existing homes
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Supply of existing homes
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According to the above data, the supply of the existing homes seem to increasing during recent recession. (2007-2009)
Supply of existing homes
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Are the market for new homes and the market for existing homes related? How? Explain.
From my point of view, they are related. For example, If there was 1000 buyers in the market looking for a house to buy and they are only buying one for living. One more of those buyer buy an existing home that means one less person will buy a new home. Therefore, If 500 of them buy a new home, that means only 500 of them will buy an existing home. If there is no existing home available, Those 500 buyer who buy an existing home might look for a new home to buy, then the demand for new home will increase.
Market for new and existing homes related?
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Furthermore, If there was so many existing homes in the market that was unable to sold out. Those facts will effect the market for new homes because buyer will compare the price of the two and will buy the cheaper one. That means the existing home market will effect the new home market.
Market for new and existing homes related? Con’t
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Moreover, If the company who build the house knows that there was so many home in the market that unable to sold out, they might build less of the new homes. They build less of the new homes because they will affect that their new home might unable to sold out as well.
Market for new and existing homes related? Con’t
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Finally, the price of the two will effect. If there was so many existing homes in the market, the new home price will effect because if the new home price is so high, people will decide to buy the existing homes. Conversely, if the price of the new homes are high, the existing home price could increase as well. And If there is less new home build, the existing home price could increase.
Market for new and existing homes related? Con’t
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On the other hand, they might not related. For example, if people who is looking for only the new home to buy and won’t consider the price or other factor of the existing homes; then there was not related between the market for new and existing homes. But overall, I believed they are related.
Market for new and existing homes related? Con’t
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years Quantity of new homes sales2000 8772001 9082002 9732003 10862004 12032005 12832006 10512007 7762008 4852009 374
Quantity of new homes
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1998 2000 2002 2004 2006 2008 20100
200
400
600
800
1000
1200
1400 Quantity of new home sales
Series1
years
Qua
ntity
of
new
hom
esQuantity of new homes graph
Recession
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Year Quantity of existing home sales
2000 51742001 53352002 56322003 61752004 67782005 70762006 64782007 56522008 49132009 5156
Quantity of existing home sales
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1998 2000 2002 2004 2006 2008 20100
1000
2000
3000
4000
5000
6000
7000
8000
Quantity for existing home sales
Series1
years
Qua
ntity
of
exis
ting
hom
e sa
les
Recession
Quantity of existing home sales graph
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1998 2000 2002 2004 2006 2008 20100
1000
2000
3000
4000
5000
6000
7000
8000
Quantity of new and existing home sales
new homesexisting homes
year
Qua
ntity
Compare Quantity of new home and existing home sales graph
Recession
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According to the above data, The quantity of new and existing homes sale seem to increase the quantity from 2000-2005, then decrease the quantity of homes sale from 2006-2009.
The quantity of existing homes sale is six times more than the quantity of new homes sale.
Explanation
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year price 2000 1690002001 1752002002 1876002003 1950002004 2210002005 2409002006 2465002007 2479002008 2321002009 216700
Price of new homes
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1998 2000 2002 2004 2006 2008 20100
50000
100000
150000
200000
250000
300000
Price for new homes
Series1
years
Pric
e fo
r ne
w h
omes
Price of new homes graph
Recession
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year
price of existing homes
2000 1436002001 1531002002 1650002003 1788002004 1954002005 2196002006 2219002007 2190002008 1981002009 172500
Price of existing homes
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1998 2000 2002 2004 2006 2008 20100
50000
100000
150000
200000
250000
Price for existing homes
Series1
years
pric
es f
or e
xisi
tng
hom
es
Recession
Price of existing homes graph
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1998 2000 2002 2004 2006 2008 20100
50000
100000
150000
200000
250000
300000
Price for new and existing homes
new homesexisting homes
years
Pric
eCompare price of new and existing homes
Recession
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The price of new and existing home is increasing from 2000-2007 and start to decrease from 2007-2009.
The new home price is higher than the existing home price at all time by a few thousands.
Explanation
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year Dollars in Billions2000 9951.52001 10286.22002 10642.32003 11142.12004 11867.82005 12638.42006 13398.92007 14061.82008 14369.12009 14119
GDP
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1998 2000 2002 2004 2006 2008 20100
2000
4000
6000
8000
10000
12000
14000
16000GDP
Series1
year
Dol
lars
in B
illio
ns
GDP graph
Recession
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year
Dollars in Billions
2000 449
2001 472.4
2002 509.5
2003 577.6
2004 680.6
2005 775
2006 761.9
2007 628.6
2008 472.5
2009 352.1
Residential Fixed investment
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1998 2000 2002 2004 2006 2008 20100
100
200
300
400
500
600
700
800
900
Residential Fixed investment
Series1
Year
Dol
lar
in B
illio
nsResidential Fixed investment Graph
Recession
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1998 2000 2002 2004 2006 2008 20100
2000
4000
6000
8000
10000
12000
14000
16000GDP and Residential fixed investment
GDPResidential fixed investment
Year
Dolla
r in
Billi
ons
Compare GPD and Residential Fixed investment Graph
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GDP is increasing from 2000-2008 and decrease during 2008-2009.
Residential Fixed investment is increasing from 2000-2005. and decreasing from 2005-2009.
GDP is higher at all time than Residential Fixed investment.
Explanation
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Demand and supply of new homes from 2000 to 2009
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200 400 600 800 1000 1200 14000
50000
100000
150000
200000
250000
300000
S_2009
S_2000 D_2009
D_2005
D_2005
Demand and supply of new homes from 2000 to 2009
P ($)
Q (units)
E_2000
E_2009
E_2005
Demand and supply of new homes from 2000 to 2009
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From 2000 to 2005:◦ Demand of new house increases, shift the
demand curve to right.◦ Supply of new house did not change.◦ The equilibrium price increases and equilibrium
quantity of new house increases.
Demand and supply of new homes from 2000 to 2009
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From 2005 to 2009◦ Demand of new house decreases, shift the
demand curve to left.◦ Supply of new house decrease, shift the supply
curve to left .◦ The equilibrium price decreases and equilibrium
quantity of new house decreases.
Demand and supply of new homes from 2000 to 2009
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Demand and supply of existing homes from 2000 to 2009
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5000 5500 6000 6500 7000 75000
50000
100000
150000
200000
250000
Demand and supply of existing homes from 2000 to 2009
E_2009
E_2000
E_2005
D_2000
D_2009
D_2005
S_2009
S_2000
P ($)
Q (units)
Demand and supply of existing homes from 2000 to 2009
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From 2000 to 2005:◦ Demand of existing house increases, shift the
demand curve to right.◦ Supply of existing house did not change.◦ The equilibrium price increases and equilibrium
quantity of existing house increases.
Demand and supply of existing homes from 2000 to 2009
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From 2005 to 2009◦ Demand of existing house decreases, shift the
demand curve to left.◦ Supply of existing house decrease, shift the
supply curve to left .◦ The equilibrium price decreases and equilibrium
quantity of existing house decreases.
Demand and supply of existing homes from 2000 to 2009
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New homes market from 2006 to 2009
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Year Quantity (units) Price ($)2006 1051 2465002007 776 2479002008 485 2321002009 374 216700
New homes market from 2006 to 2009
Demand and supply of new homes from 2006 to 2009
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300 400 500 600 700 800 900 1000 1100200000
210000
220000
230000
240000
250000
260000
New homes market from 2006 to 2009
E_2009
E_2006E_2007
E_2008
S_2009
S_2006
S_2007
D_2009
D_2008
D_2007
D_2006
P ($)
Q (units)
Demand and supply of new homes from 2006 to 2009
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From 2006 to 2007◦ Quantity of new house decrease.◦ Price of new house increase.◦ Supply decreases, shift the curve to left.◦ Demand decreases, shift the curve to left.◦ Supply dominates demand in the market of new
house.
New homes market from 2006 to 2009
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From 2007 to 2008◦ Quantity of new house decrease.◦ Price of new house decrease.◦ Demand decreases, shift the demand curve to
left.◦ Supply increases, shift the demand curve to right.◦ Demand dominates supply in the market of new
house.
New homes market from 2006 to 2009
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From 2008 to 2009◦ Quantity of new house decrease.◦ Price of new house decrease.◦ Supply increases, shift the curve to right.◦ Demand decreases, shift the curve to left.◦ Demand dominates supply in the market of new
house.
New homes market from 2006 to 2009
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Existing homes market from 2006 to 2009
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Year Quantity (units) Price ($)2006 6478 2219002007 5652 2190002008 4913 1981002009 5156 172500
Existing homes market from 2006 to 2009
Demand and supply of existing homes from 2006 to 2009
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4800 5000 5200 5400 5600 5800 6000 6200 6400 66000
50000
100000
150000
200000
250000
Existing homes market from 2006 to 2009
P ($)
Q (units)
E_2006
E_2007
E_2008
E_2009
S_2006
S_2008
D_2006
D_2007
D_2008
Demand and supply of existing homes from 2006 to 2009
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From 2006 to 2007:◦ Quantity of existing house decrease.◦ Price of existing house decrease.◦ Supply increases, shift the curve to right.◦ Demand decreases, shift the curve to left.◦ Demand dominates supply in the market of
existing house.
Existing homes market from 2006 to 2009
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From 2007 to 2008:◦ Quantity of existing house decrease.◦ Price of existing house decrease.◦ Supply did not change.◦ Demand decreases, shift the curve to left.◦ Demand dominates supply in the market of
existing house.
Existing homes market from 2006 to 2009
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From 2008 to 2009:◦ Quantity of existing house increase.◦ Price of existing house decrease.◦ Supply decreases, shift the curve to left.◦ Demand did not change.◦ Supply dominates demand in the market of
existing house.
Existing homes market from 2006 to 2009
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http://www.investorwords.com/4086/recession.html
http://www.investopedia.com/terms/r/recession.asp
http://money.cnn.com/2008/12/01/news/economy/recession/index.htm
http://economix.blogs.nytimes.com/2010/09/20/the-recession-has-officially-ended/?scp=8&sq=current%20recession%20end?&st=Search
Work cited
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http://news.yahoo.com/s/atlantic/20100920/cm_atlantic/recessionofficiallyendedjune2009whatitmeans5092
http://www.creditwritedowns.com/2010/09/the-recession-ended-in-june-2009.html
http://articles.latimes.com/2010/sep/21/business/la-fi-recession-over-20100921
http://www.cbsnews.com/stories/2010/09/20/business/main6884342.shtml
Work cited con’t
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http://www.creditwritedowns.com/2010/10/demand-for-new-homes-in-u-s-is-far-below-prior-records.html
http://www.businessinsider.com/awesome-existing-home-sales-charts-from-calculated-risk-2010-4
http://wallstreetpit.com/41827-existing-home-sales-worst-on-record
Work Cited Con’t
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http://www.recharts.com/NewHomeSales.html
http://www.taintedalpha.com/tag/existing-home-sales-months-supply/
http://www.ritholtz.com/blog/2010/09/its-official-recession-ended-june-2009/
http://calculatedriskimages.blogspot.com/2010/08/existing-home-months-of-supply-july.html
Work Cited Con’t
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http://www.calculatedriskblog.com/2010/09/lawler-again-on-existing-home-months.html
http://seekingalpha.com/article/74332-new-home-sales-inventory-chart-you-re-going-the-wrong-way
http://www.eclectecon.net/2009/01/the-causes-of-the-200809-recession.html
http://www.marketwatch.com/story/us-recession-began-in-december-2007-nber-says
http://useconomy.about.com/od/grossdomesticproduct/a/cause_recession.htm
Work Cited Con’t
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Thank you