1. Business Cycle Data
Fall 2016

2. Say’s Law explains these patterns better than a Keynesian perspective
Say’s Law explains these patterns better than a Keynesian perspective. True or False, and Why? (Use the evidence on the table to back up your answer. )

3. To name the date of the most recent trough?
Dec 2007
Dec 2007
March 2001
Nov 2001
June 2009
July, 2009
estimate
Quarterly Real GDP data: did the NBER use this to pinpoint the last peak? Did the NBER use this to estimate
To name the date of the most recent trough?

4. Quick read small sample monthly household survey- civilian unemployment rate
Does NBER use u to pinpoint peaks? troughs? Engage the evidence to answer.

5. Higher precision monthly data- establishment survey E=total # employed
Does NBER use E to pinpoint peaks? troughs? Engage the evidence to answer.

6. High precision monthly data- did the NBER use industrial production to pinpoint
both peaks & troughs? Engage the evidence to answer.

7. Which slump was more severe in terms of # of jobs lost from top employment to bottom employment?

8. The real economy P and D,y diagram?
How would the Political Business Cycle explain the turning points? How would they draw
The real economy P and D,y diagram?

9. What do all three endogenous theories of business cycles concentrate on to understand what gets the economy out of balance in an expansion?

10. How does the Underconsumptionist Theory explain why expansions do not last forever? What causes downturns? Why do contractions not last forever? What causes upturns?

11. How does the Tendency of the Rate of Profit to Fall Theory explain why expansions don’t last forever? Show using the formula for the value rate of profit. Why do recessions not last forever?

12. How does the profit squeeze theory explain why expansions don’t last forever? Explain using the formula for the value rate of profit. Why do slumps not last forever?

13. How would the Underconsumptionist theory explain the buildup of imbalances during the expansions?

14. How well would the Underconsumptionist theory forecast the downturns given the evidence on labor costs per unit of output and Consumer spending?

15. How would a Marxist theory explain the relationship between these variables and the
Business cycle turning points? Show with causal chains and an aggregate Demand & Supply diagram.

17. Industrial Production in Manufacturing, blue left scale
Industrial Production, Mfg blue
E in mfg.
Industrial Production in Manufacturing, blue left scale
Employees in Goods Producing Industries, red, right scale
What is happening to productivity of labor during the early phase of an expansion? What does this do to s/v? the rate of profit?

18. Unemployment rate, blue Unemployment rate, red
Federal Funds interest rate, red
Federal Funds Rate, blue
Political Business Cycle- Why does the Fed raise interest rates when u falls?
Why does the Fed lower rates when the unemployment rate rises? (Show using
A Keynesian Agg Demand & S diagram with P level on vertical, y on horizontal)

19. How well does the Underconsumptionist Theory explain the last two downturns?

20. Consumption Spending blue, left scale
Investment Spending red, right scale
How well does the Underconsumptionist Theory fit this evidence?

21. Consumption Spending blue, left; Unit Labor Cost red, right
What happens to labor costs per unit of output as these expansions mature?
What happens to labor costs per unit of output after a slump has taken place? When unit labor costs rise, what happens to s/v? Which theory best fits this data?

22. Real Investment red; Total profits after tax, blue
Just looking at the data, what happens to real investment when profits rise? Fall? Show on a Marxist aggregate demand and supply diagram the reasons for 1)an expansion 2) a contraction

23. E blue
Investment red
What do companies tend to invest in first, constant capital or variable capital?
How would the tendency of the rate of profit to fall theory explain the imbalance that appears in the expansion? Left scale, blue, # of private industry employees; right scale red, gross private domestic investment.

24. Labor costs per unit of output,
I blue, right scale
Labor costs per unit of output,
Red, left
Real Investment right scale, blue; labor costs per unit of output left scale, red
How would the profit squeeze theory explain investment spending before the downturn? How would it use the evidence to explain the recovery of investment spending after a recession has gone on?

25. After tax profits red, left
u rate right scale
Total after tax profits, red, left scale; unemployment rate, blue, right scale
Which business cycle theory would use this evidence to explain
downturns and upturns?

26. Total After-tax Profits red, left scale; Labor Costs per unit of output, blue, right scale

27. What happened to the # of bankruptcies in the recessions of 1991, 2001, and 2009?
How would the tendency of the rate of profit to fall theory explain what happens in
A slump to create the conditions for the next expansion? (Hint: What do bankruptcies do to c/v? the rate of profit?)

28. Labor Costs per unit of output blue, left; civilian unemployment rate red, right

29. Recent Data Releases Nov 2016

30. U.S. Adds 161,000 Jobs in October; Jobless Rate Ticks Down to 4.9%
U.S. Adds 161,000 Jobs in October; Jobless Rate Ticks Down to 4.9%
Wage growth accelerated to its strongest pace since the recession

31. A highlight from Friday’s report: Average hourly earnings for private-sector workers rose 2.8% in October compared with a year earlier, the strongest annual wage growth since June 2009.
The report, with its evidence of a tightening labor market, likely keeps the Federal Reserve on track to potentially raise rates at its mid-December policy meeting.

32. A broad measure of unemployment and underemployment, known as the U-6, including Americans working part-time jobs who want full-time positions, was 9.5% in October, dropping from 9.7% from the prior month and reaching its lowest level since April 2008.

33. Friday’s report was the last major economic indicator to be released before Election Day. It came after the Commerce Department last week reported U.S. economic growth accelerated during the third quarter following a modest stretch in late 2015 and early 2016.

34. The statement noted that “although the unemployment rate is little changed in recent months, job gains have been solid.” Fed Chairwoman Janet Yellen had welcomed a rise in labor-force participation over the past year as evidence that a tightening job market is drawing Americans back into the workforce without generating intense pressure on wages and prices that might force the Fed to raise interest rates quickly to control inflation.
“We’re not seeing strong pressures on utilization suggesting overheating, and my assessment would be, based on this evidence, that the economy has a little more room to run than might have been previously thought,” Ms. Yellen said in September. “That’s good news.”

35.
WASHINGTON—U.S. worker productivity advanced at the best rate in two years during the third quarter, but the broader trend remains consistent with a decade-long decline.
Nonfarm business productivity, measured as the goods and services produced by American workers per hour, increased at a 3.1% seasonally adjusted annual rate in the third quarter, the Labor Department said Thursday. The change reflected a strong increase in output while hours worked increased only slightly.

36. Unit labor costs at nonfarm businesses rose at a 0
Unit labor costs at nonfarm businesses rose at a 0.3% annual rate in the third quarter. Economists surveyed by the Journal had expected growth at a 1.2% pace. The small increase was a slowdown from the second quarter’s revised 3.9% advance. Rising unit labor costs can erode profits and put pressure on firms to raise prices.

37. U6- broader measure of unemployment rate
u civilian unemployment rate
Have we reached the wall of full employment yet? Have we run out of the reserve army of labor?

38. Has a wage spike hit yet? Compare with before previous crash….
” AtlantaFed. "Wage Growth Tracker." - Federal Reserve Bank of Atlanta.” N.p., n.d. Web. 25 Oct N.p., n.d. Web. 25 Oct