Spp2 Topic 2: U.S. Economy and Markets

Over Time

Xiaozhen ChenHai Tran

U.S. Real GDPYears Real GDP

(Millions of 2005 dollars)

Years Real GDP (Millions of 2005 dollars)

1984 6,577,100 1997 9,854,3001985 6,849,300 1998 10,283,5001986 7,086,500 1999 10,779,8001987 7,313,300 2000 11,226,0001988 7,613,900 2001 11,347,2001989 7,855,900 2002 11,553,0001990 8,033,900 2003 11,840,7001991 8,015,100 2004 12,263,8001992 8,287,100 2005 12,638,4001993 8,523,400 2006 12,976,2001994 8,870,700 2007 13,254,1001995 9,093,700 2008 13,312,2001996 9,433,900 2009 12,987,400

U.S. Real GDP

Recession

Recession

U.S. Real GDP Explanation According to the select data, It shows

that the U.S. Real GDP is increase over time from 1984 to 2009 in general.

Although there is an increase in general, we found two declines that the U.S. economy experienced in this period.

Those two decline periods are from 1990 to 1991 and from 2008 to 2009.

U.S. Real GDP Explanation Recall that real GDP is the gross domestic product

measured in terms of the price level in a base period.

Where GDP is the total market value of all final goods and services produced annually within the borders of the United States, whether by U.S. or foreign-supplied resources.

Also, Economic growth is the expansion of real GDP (or real GDP per capita) over time.

Recession is a period of general economic decline, defined usually as a contraction in the GDP for six months or longer .

U.S. Real GDP Explanation Therefore, the U.S. economic is growth over time

since the real GDP increase. the U.S. is in a recession in the period from 1990

to 1991 and from 2008 to 2009 because the real GDP is decrease. The U.S. economic is decline in these period.

From the graph, we found out that there was another decline during 2000 to 2001,but the data in the data table shows that was a slightly increase from 11,226,000 to 11,347,200 during this period. therefore, we believed there was a short period of recession in some months during this period.

S&P 500 Stock Market, Price Index and Volume

Years S&P 500 Stock Market, Price index

Years S&P 500 Stock Market, Price Index

1984 167.24 1997 970.431985 211.28 1998 1229.231986 242.17 1999 1469.251987 247.08 2000 1320.281988 277.72 2001 1148.081989 353.4 2002 879.821990 330.22 2003 1111.921991 417.09 2004 1211.921992 435.71 2005 1248.291993 466.45 2006 1418.31994 459.27 2007 1468.361995 615.93 2008 903.251996 740.74 2009 1115.1

S&P 500 Stock Market, Price index and Volume

Decline

Decline

Declines

S&P 500 Stock Market, Price Index and Volume

Years S&P 500 Stock Market, Volume

Years S&P 500 Stock Market Volume

1984 93063000 1997 5648254001985 138908500 1998 7227568001986 154548600 1999 9097609001987 186222200 2000 12323150001988 141529000 2001 13036085001989 167968000 2002 12896257001990 161548000 2003 13121195001991 209637600 2004 14495181001992 229184500 2005 20571252001993 270900000 2006 24628490001994 314656600 2007 33631275001995 400939500 2008 53207913001996 451853800 2009 4163287200

S&P 500 Stock Market, Price Index and Volume

Decline

Decline

Decline

S&P 500 Stock Market, Price Index and Volume Explanation

The S&P 500 Composite Stock Price Index is an index of 500 stocks from major industries of the U.S. economy. There are indices for almost every conceivable sector of the economy and stock market.

According to the data table and graph above, there are four significant declines in the price index during the period 1984 to 2009 for the S&P 500 Stock Market.

These periods are from 1989 to 1990; 1993 to 1994, 1999 to 2002 and 2007 to 2008.

S&P 500 Stock Market, Price Index and Volume Explanation

Also, we found three declines during the period 1984 to 2009 in the volume for the S&P 500 Stock Market in the graph.

Those periods are from 1987 to 1988, 2001 to 2002 and 2008 to 2009.

But, we found another period has a decline on the volume from the data table, which is 1989 to 1990. Maybe because it is just slightly decline from 167968000 to 191548000, the graph is not detail enough to show this decline.

S&P 500 Stock Market, Price Index and Volume Explanation

According to a web, if a stock is truly in a healthy uptrend, then volume should rise as prices rise. Negative volume divergence is where price is rising, but volume is declining. This divergence indicates that even though demand still outweighs supply, buyers are not willing to pay up to own the stock.

Therefore, we conclude that during the period 1987 to 1988 and 2008 to 2009 there were a negative volume divergence in the stock market because the price of the stock is rise but the volume declines.

Also, we are conclude that the period from 1987 to 1988, 1989 to 1990, 1993 to 1994, 1999 to 2002 and 2007 to 2009, the stock market is unhealthy because the price and volume of the stock are not increase or decrease at the same time during those period.

Those declines in price and volume could lead the economy market to a recession because recall that one of the factor that cause a recession is typically accompanied by a drop in the stock market.

New Car market, average price and quantity sold

Years New car market average price

Years New car market average price

1984 76.28 1997 105.2621985 78.337 1998 103.6421986 79.725 1999 102.7561987 83.628 2000 102.6291988 83.654 2001 101.9581989 86.535 2002 102.2591990 87.110 2003 98.3331991 89.799 2004 98.6201992 91.616 2005 1001993 94.584 2006 101.041994 98.885 2007 100.5371995 101.200 2008 98.3471996 104.081 2009 99.99

New car market, average price and quantity sold

Declines

Decline

New car market, average price and quantity sold

Years New car market quantity sold

Years New car market quantity sold

1984 51.484 1997 73.4681985 56.624 1998 79.5181986 56.535 1999 87.1441987 55.939 2000 85.8581988 58.845 2001 82.0531989 59.873 2002 91.4891990 54.408 2003 92.4561991 48.818 2004 96.1931992 54.537 2005 1001993 59.403 2006 98.8151994 66.69 2007 98.7981995 66.62 2008 80.3841996 67.798 2009 60.568

New Car market, average price and quantity sold

Declines

New car market, average price and quantity sold

There were three declines in the new car market average price during the time from 1984 to 2009.

Those average price for new car market declines periods were from 1997 to 2001, 2002 to 2003 and 2006 to 2008.

There were six declines in the quantity sold of the new car market during the time from 1984 to 2009.

Those periods were from 1985 to 1987, 1989 to 1991, 1994 to 1995, 1999 to 2001, 2006 to 2007 and 2008 to 2009.

New House market, average price and quantity soldYears New house market

average priceYears New house market

average price1984 79,900 1997 146,0001985 84,300 1998 152,5001986 92,000 1999 161,0001987 104,500 2000 169,0001988 112,500 2001 175,2001989 120,000 2002 187,6001990 122,900 2003 195,0001991 120,000 2004 221,0001992 121,500 2005 240,9001993 126,500 2006 246,5001994 130,000 2007 247,9001995 133,900 2008 232,1001996 140,000 2009 216,700

New house market, average price and quantity sold

Recession

Recession

New House market, average price and quantity soldYears New house market

quantity soldYears New house market

quantity sold1984 639 1997 8041985 688 1998 8861986 750 1999 8801987 671 2000 8771988 676 2001 9081989 650 2002 9731990 534 2003 10861991 509 2004 12031992 610 2005 12831993 666 2006 10511994 670 2007 7761995 667 2008 4851996 757 2009 374

New house market, average price and quantity sold

Decline

DeclinesDeclines

New house market, average price and quantity sold

From the graph and the data table, we found two declines in the price in the year from 1984 to 2009

Those declines on new house market average price periods are from 1990 to 1991 and from 2007 to 2009.

The new house market are faced five declines on the quantity house sold during those years.

They were in the period of 1986 to 1987, 1988 to 1991, 1994 to 1995 , 1998 to 1999 and 2005 to 2009.

New house market, average price and quantity sold

Recall that one piece that cause the recession is a decline in the housing market.

The decrease on the price and quantity of house sell on those period could cause a recession. And the current recession from 2007 to 2009 is a good example. The house price and quantity drop serious and make the economy market into a serious recession.

One interesting that we discover is that the quantity of the house sold from 2007 to 2009 is less than from 1984 to 1985. It is so bad for our economy.

S&P 500 highest and lowest price and volume

Date Volume Adj. Close

Highest 10/9/2007 2,932,040,000 1,565.15

Lowest 7/24/1984 74,370,000 147.82

Friday 10/29/2010 3,537,880,000 1,183.26

S&P500 Demand-Supply diagram

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1,000

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2,000

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3,000

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4,000

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400800

12001600

S&P 500 Stock market S1

S2

D1

D2

E1

E2

S&P 500 Explanation From 1984 to 2007:

› Volume and price of stock increased.› Demand stock increased shift the demand curve

to right.› Demand dominated supply from 1984 to 2007.

From 2007 to 2010:› Volume of stock increased while price

decreased.› Supply stock increased shift the supply curve to

right.› Supply dominated demand from 2007 to 2010.

Work Cited http://

www.businessdictionary.com/definition/price-index.html

http://www.sec.gov/answers/indices.htm http://www.investorwords.com/4086/recession.html http://www.measuringworth.com/

http://finance.yahoo.com/

http://www.economagic.com/nipa.htm#U7

http://www.huduser.org/portal/periodicals/ushmc/summer10/hist_data.pdf

Thank you for reading!