Economic Indicators Business Cycle Real GDP versus Nominal
Economic Indicators • Business Cycle – “Real” GDP versus “Nominal” – GDP Deflator – C+I+G+NX – 6 month contraction = Recession • Unemployment Rate – 4 Types – Calculation • Inflation – CPI/GDP Deflator – Cost of Living Adjustment – “Real” Income
GDP • Total value of all final goods and services produced within a country within a given year. • Real GDP- accounts for inflation. • C + I + G + NX ___________
Business Cycle Recession- real GDP goes down for at least 6 months. R E A L G D P
GDP Deflator • Nominal $$$$/GDP deflator = Real $$$ • Real $$$ = Adjusted
GDP • C + I + G + NX • Don’t Count – Used – Transfers – Non-market – Intermediate goods
All Stats are for People ___ or Older • • Population = 1000 Pop. with jobs = 600 Pop. Without jobs = 400 Pop. Actively seeking employment in past month = 190 • Pop. from previous category who currently have a job = 40
Unemployment Formula Unemployment Rate= Unemployed Persons/Total Labor Force X 100 Labor Force= all civilians 16+ who are working or looking for a job Unemployed Persons= 16+ civilians who are looking for a job but do not have one
Types of Unemployment • Frictional- temporary while searching • Structural-lack of skills/lack of need for skills/replacement by technology/replacement by merger or streamlining • Cyclical- related to health of overall economy • Seasonal- seasonal • Not
Not Unemployed If… • • Under 16 Have a Job Are not actively seeking a job Are not currently available to work
Unemployment (National)
Unemployment Formula Unemployment Rate= Unemployed Persons/Total Labor Force X 100 Labor Force= all civilians 16+ who are working or looking for a job Unemployed Persons= 16+ civilians who are looking for a job but do not have one
Unemployment (National)
Unemployment (National)
Labor Force Participation Rate • % of working age people who are – Working – Looking for a Job • Working Age – 16 -64
Labor Force Participation Rate
Labor Force Participation Rate
Labor Force Participation Rate
• • • Frictional Structural Cyclical Seasonal Not
Hit the debt ceiling, government slashes spending, GDP tanks • • • Frictional Structural Cyclical Seasonal Not
You can’t stand this class anymore, drop out, and start looking for work • • • Frictional Structural Cyclical Seasonal Not
• • • A former switchboard operator is having trouble finding a skilled position Frictional Structural Cyclical Seasonal Not
New Jersey surf instructor in January • • • Frictional Structural Cyclical Seasonal Not
Mr. Parish this summer. • • • Frictional Structural Cyclical Seasonal Not
Which Type of Unemployment? • With new and easier tax software, John is afraid H&R Block might not need him in a few years. – Frictional – Cyclical – Structural – Seasonal
Poor _____ Assignment • A. Write a brief story about a person who experiences all four types of unemployment within one year and then drops out of the labor force • B. Title it- Poor (name of character) • C. Put the type of unemployment in parenthesis, behind each example. (i. e. structural)
Calculate Population = 10, 000 Population 16 -64 = 8, 000 Employed Persons = 5, 000 Unemployed Persons = 350 ----------------------------Labor Force = ______ Unemployment Rate = _______ Labor Force Participation Rate = _______
Labor Force Participation Rate • % of working age people who are – Working – Looking for a Job • % working age population in the labor force • Working Age – 16 -64
Calculate Population = 10, 000 Population 16 -64 = 8, 000 Employed Persons = 5, 000 Unemployed Persons = 350 ----------------------------Labor Force = 5, 350 Unemployment Rate = 6. 54% Labor Force Participation Rate = 66. 88%
Consumer Price Index • Measures change in price level of a “fixed basket of goods” • Urban Areas • Used for Social Security “cost of living” adjustments
Consumers Price Index Subgroups Restaurant meals and ready-to-eat food June 2000 June 2001 1016 1054 996 1043 Clothing 1005 1022 Footwear 1000 1006 Alcoholic drinks 1015 1041 Stationery, books, magazines and newspapers 1008 1066 All Groups 1020 1053 Household appliances and furnishings
Consumer Price Index • Babe Ruth’s Salary – 1931= $80, 000 • Average Player Today= $2, 272, 620
Consumer Price Index • Herbert Hoover= $75, 000 • President Obama = $400, 000
CPI (Consumer Price Index)
GDP Deflator versus CPI • GDP Deflator- changing basket • CPI- fixed basket
Stock Indexes measure the performance of a segment of the stock market • Dow Jones Industrial Average – 30 Large Companies • NASDAQ – 3, 000 companies – Technology/growth companies (ex- Google) • S&P 500 – 500 companies of various industries
NASDAQ
Economic Indicators • Business Cycle – *GDP = 16. 7 Trillion – GDP Growth = 1. 9% • Unemployment Rate – *5. 9% • Inflation – CPI = 1. 5% • Stock Indices
Externalities • Consequence of economic activity affecting an uninvolved party • Positive or Negative • Production or Consumption
Externalities • Sand Casino in Bethlehem • Positive? Negative? • Production? Consumption?
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