Transcript Business Cycles

Business Cycles & Fluctuations
http://www.investopedia.com/video/play/busi
ness-cycle/
Business Cycles
The regular ups [increases] and downs
[decreases] of the Gross Domestic Product.
Can interrupt the nation’s economic growth.
Recession
A period during which GDP declines for at
least two quarters in a row [6 months]
Peak
A recession begins when the economy
reaches a peak: the point where GDP stops
going up.
Trough
The end of a recession. The point where
GDP stops decreasing and begins to rise.
Expansion
A period of recovery from recession.
Continues until the economy reaches a new
peak.
Depression
If a recession is very severe, it could lead to
a depression:
A state of the economy with:
•Large numbers of people out of work
•Major shortages and
•Low production [excess capacity in
manufacturing plants]
UNEMPLOYMENT
Civilian Labor Force
The sum of all people 16 years and older
who are either employed or actively seeking
employment.
Excluded: military, imprisoned,
institutionalized.
Unemployed
People available for and looking for work
during the last 4 weeks.
Unemployment rate
The number of unemployed divided by the
total number of people in the civilian labor
force.
Number of unemployed =unemployment rate
Civilian labor force
15,100,000
154, 082,000
= 9.8% unemployment rate
U.S. on average= 6 %
Our Unemployment Rates
•Philadelphia: 7.3% (Feb 2015)
•Pennsylvania: 5.2% (Feb 2015)
•Northeast: 5.6% April, 2014
•United States: 5.5% March, 2015
•Detroit, Michigan: 12.5% (Feb 2015)
*Bureau of Labor Statistics, United States Department of Labor
Underemployment
Discouraged workers: people who give up and
stop looking for work. [not included in the
unemployment rate]
Underemployed workers who would like to
work more hours or prefer a job that better
matches their skills.
Frictional Unemployment
Workers changing jobs or waiting to go to a new
job
Short-term unemployment that occurs while
workers search for the jobs best suited for their
skills and interests.
Structural Unemployment
Fundamental changes in the economy that
reduces the demand for some workers.
Arises from a mismatch of skills between
job seekers and the types of jobs available.
Technological Unemployment
Occurs when workers are replaced by
machines or automated systems that make
their skills obsolete.
ATMS/Bank Tellers
Cyclical Unemployment
Relates to a change in the business cycle.
Joblessness caused by economic contraction.
During contraction, production [measured as
GDP] declines.
Business stop hiring or lay workers off.
Recession/Depression
Seasonal Unemployment
Results from seasonal changes in the
weather or in demand for certain seasonrelated jobs.
landscaping, agricultural jobs, beach
resorts.
• http://content.time.com/time/video/player/0,
32068,1149720836001_2092416,00.html