## # A tibble: 1,104 × 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 1,094 more rows

Chater Openning Questions

Managers need to know: current economic state in order to make informed decision about the future. It is important to keep track of the highs and lows of the of the economy will allow for a businnes manager to plan a head.

Solution

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

Historical Experience

Gross Domestic Product

Profits across the Economic Cycle

Consumer Spending

GDP vs Consumer Spending

GDP vs Consumer Services

GDP vs Consumer Durables

GDP vs Consumer Non-Durables

Housing

GDP vs Nonresidential Construction

Capital Spending

Government Spending

Exports

Imports

Economic terms

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:

Gross Domestic Product (GDP)

GDP is the sum of everything that is produced in the US.

Real versus nominal GDP

Real GDP is similar to nominal GDP but real GDP accounts for inflation. ## Gross National Product (GNP) GNP is similar to GDP but takes into account foregeign investments as well.

Recession

A recession is any period of economic downturn usually coensiding with a decline in GDP.

Leading Indicators

Leading indicators are economic indicators that have a leading impact on the business cycle. # Economic events

2007 Great recession

The 2007 great recession was the result of what happens when greed goes unchecked. Banks became complacient with the housing market, coming to a point where everyone thought the bouble would never pop. When this housing bouble popped the banks assets were so tied up in poor housing loans that almost all banks were forced to default on their loans. This would have led to the collaspe of the financial system as we now know it so the governmant was forced to step in and bail out the big banks.