SPP1 topic 2 XiaoZhen Chen HaiTran Ng Man
Recession • 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 definition con’t • 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 • 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--Begin • When did the recent recession begin? • According to CNN.com. The National Bureau of Economic Research declares that the recession begin Dec,2007.
Recession-End • 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—Why recession in 2007 • 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—Reason why there is a recession in 2007 con’t • 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 to end • 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 Con’t • 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 • 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 • 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 • 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.
Recent Recession—Demand New Homes • The demand for new homes during recession.
Recent Recession—demand for new homes • According to the graph, the demand for the new homes is decreasing during the recent recession(2007-2009)
Recession—Demand for existing homes • Demand for existing homes
Recession—Demand for existing homes • 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)
Supply of new homes • Supply of new homes
Supply of new homes con’t • According to the above data, the supply of new homes seems to increase during recent recession. (2007-2009)
Supply of existing homes • Supply of existing homes
Supply of existing homes • According to the above data, the supply of the existing homes seem to increasing during recent recession. (2007-2009)
Market for new and existing homes related? • 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? Con’t • 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 • 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 • 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 • 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.
Quantity of new homes graph Recession
Explanation • 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.
Price of new homes graph Recession
Compare price of new and existing homes Recession
Explanation • 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.