## # A tibble: 1,096 × 5
## # Groups: symbol [8]
## symbol date price change text
## <chr> <date> <dbl> <dbl> <glue>
## 1 GDPC1 1947-01-01 2034. NA 1947.1,
## Growth: NA
## 2 GDPC1 1947-04-01 2029. -0.00267 1947.2,
## Growth: -0.3%
## 3 GDPC1 1947-07-01 2025. -0.00207 1947.3,
## Growth: -0.2%
## 4 GDPC1 1947-10-01 2057. 0.0156 1947.4,
## Growth: 1.6%
## 5 GDPC1 1948-01-01 2087. 0.0150 1948.1,
## Growth: 1.5%
## 6 GDPC1 1948-04-01 2122. 0.0165 1948.2,
## Growth: 1.7%
## 7 GDPC1 1948-07-01 2134. 0.00573 1948.3,
## Growth: 0.6%
## 8 GDPC1 1948-10-01 2136. 0.00112 1948.4,
## Growth: 0.1%
## 9 GDPC1 1949-01-01 2107. -0.0138 1949.1,
## Growth: -1.4%
## 10 GDPC1 1949-04-01 2100. -0.00341 1949.2,
## Growth: -0.3%
## # … with 1,086 more rowsManagers need to know:
| your customers/products | magnitude of spending changes | timing of spending changes |
|---|---|---|
| consumer services | very stable | coincident with GDP |
| consumer nondurables | stable | coincident with GDP |
| consumer durables | volatile | coincident with GDP |
| housing construction | very volatile | leads fluctuations in GDP |
| capital spending | very volatile | lags fluctuations in GDP |
| govt. spending, federal | moderate | not always corr. with GDP |
| govt. spending, state & local | stable | lags fluctuations in GDP |
| exports | volatile | not corr. with GDP |
| imports | volatile | varies depending on product |
The economy is always changing, and spells of recession vs gains happen throughout the days, weeks, and over years. We must look at the history of the economy in order to make informed decisions on whether to buy more, sel more and vice versa.
Gross Domestic Product
We see recessions and inclines when looking at the market over periods of time, where the market goes high, jobs are filled up and people are making more and spending more money. Declines means more people out of work, spending less and less and missing out on things they may need.
COnsumer spending ultimately depends on the cycle, recession means consumers spend less, because they have less, vs when we are gaining in the market, more people have money to spend on things they want/need.
GDP vs Consumer Spending
GDP vs Consumer Services
GDP vs Consumer Durables
GDP vs Consumer Non-Durables
Construction of new housing varies far wide and affects the market by alot. The more homes that are built, the supply is up, doesn’t mean that the demand is there. Supply and demand have the ultimate factor on home buying/ selling.
GDP vs Nonresidential Construction
Business purchases of buildings, software, and equipment are all pieces of capitol spending, they usually depreciate over periods of time from a year on.
Businesses that sell to the government won’t find themselves in recession often, as it seems like the government has infinite spending capability, because if the government is buying, they need it for something. Weak spending by the overnment will affect a recession.
Exports idsplay large swings but don’t directly correlate to a recession. Exports are goods sent to another country.
Imports are goods traded to the home country in which you live in. Demands for imports cary based upon how much demand there actually is for a country, they may have a shortage and demand is high, vs the have overflow and don’t need any.
Explan each of the following terms in your own words. The author explains the terms in the textbook. If necessary, you may also Google the term on the Web. Good resources include:
GDP is a measure how sales, and expenses through a country within periods of time, like quarters or half-years. This is sales through goods, exports/imports, housing etc.
Nominal GDP is the total value of all the goods and services produced in a given period. Real GDP is just nominal GDP adjusted for inflation. The purpose of the real GDP is to measure the real growth of production without any distorting effects from inflation.
GNP is another measure of a countries economic performance. It is calculated by adding the income earned by residents from investments abroad to the gdp, less the corresponding income was sent home by foreigners who are living in the country.
A recession speaking broadly is a period of slow or negative economic growth, usually accompanied by rising unemployment. More precise definitions of a recession are 1 When an economy is growing at less than its long term trend rate of growth and it has spare capacity. The second definition for a recession is two consecutive quarters of a falling GDP.
Leading indicators are groups of statistics that point to the future direction of the economy and the business cycle. Certain economic variables fairly consistently, precede changes in the GDP while others changes in inflation.
The great recession was a very large and long winded recession that started in 2007 which incredibly negatively impacted the U.S. and global economy. It also led to many people being laid off or fired, major and small businesses closing, the housing market collapsing, and major government bailouts such as the bailout given to GM. It’s causes were cheap credit and tax lending standards that gave fuel to a housing bubble that when burst left financial institutions holding trillions of dollars worth of near worthless investments in subprime mortgages. It affected society by making many people more money conscious, buying less, buying more fuel efficient cars and generally creating a more frugally acting society at least for a little while.