Assignment: Analysis of the Business Cycle
Economic fluctuations are the rise and fall of economic activity relative to the long-term growth trend of the economy. U.S. Economic Fluctuations has two phases one is the periods of expansion and other is the contraction.
The period of contraction includes recession and depression, Recession is mild contraction, a period of decline in total output and employment usually lasting at least two consecutive quarters. Depression is sharp decrease in the nation’s total production accompanied by high unemployment lasting more than a year. Periods of expansion Begin when economic activity starts to increase and continues until the economy reaches a peak. Now let us analyze the data taken government websites given above
According to the business cycle theory an economy that undergoes no real growth for a period of six months or more is technically in recession. From seeing the table 1 of real GDP growth rate we can say that recession started from 3rd quarter of 2008 when the real GDP growth rate was -2.7% and continues till the 4th quarter with -5.4% negative growth of real GDP. At this point the U.S. economy was announced officially in recessionary phase; the current condition of GDP is that it is that it has taken a positive trend from 3rd quarter of 2009 with 5% growth rate. The latest data on GDP real growth rate shows a positive but decreasing growth rate from 5% to 1%, this has happened because of the debt crises USA is facing from last 2 months, dollar value has gone down from AAA to AA, but we can say that the recovery phase has already started in United States.
Table 2 and 3 shows the inflation rate and unemployment rate. During this recession the unemployment rate is high and inflation rate is low through this graph and table 2. The inflation rate is negative in July 2009 and the unemployment rate is highest with 9.5% in June 2009. In the year 2010 till the July unemployment rate has decline and stood at 9.5% whereas the inflation rate became positive but
The period of contraction includes recession and depression, Recession is mild contraction, a period of decline in total output and employment usually lasting at least two consecutive quarters. Depression is sharp decrease in the nation’s total production accompanied by high unemployment lasting more than a year. Periods of expansion Begin when economic activity starts to increase and continues until the economy reaches a peak. Now let us analyze the data taken government websites given above
According to the business cycle theory an economy that undergoes no real growth for a period of six months or more is technically in recession. From seeing the table 1 of real GDP growth rate we can say that recession started from 3rd quarter of 2008 when the real GDP growth rate was -2.7% and continues till the 4th quarter with -5.4% negative growth of real GDP. At this point the U.S. economy was announced officially in recessionary phase; the current condition of GDP is that it is that it has taken a positive trend from 3rd quarter of 2009 with 5% growth rate. The latest data on GDP real growth rate shows a positive but decreasing growth rate from 5% to 1%, this has happened because of the debt crises USA is facing from last 2 months, dollar value has gone down from AAA to AA, but we can say that the recovery phase has already started in United States.
Table 2 and 3 shows the inflation rate and unemployment rate. During this recession the unemployment rate is high and inflation rate is low through this graph and table 2. The inflation rate is negative in July 2009 and the unemployment rate is highest with 9.5% in June 2009. In the year 2010 till the July unemployment rate has decline and stood at 9.5% whereas the inflation rate became positive but