1. The Great Recession Began in December 2007 and Ended June 2009.

2. Recessions in the United States
Recession – a period during which real GDP declines for two quarters in a row
Trough – the turnaround point where real GDP stops going down
Expansion – a period of recovery from a recession, real GDP increases
Peak – the point at which real GDP stops going up
Recessions in the United States

4. How are Americans hurt during a recession?

5. Business Cycles
Essential Questions: Why does economic activity fluctuate in a market economy? Why are leading indicators a valuable tool for economists?

6. 1. 2. 3.

7. 4. 5. 6.

14. Capital Expenditures Businesses expect future sales to increase
Businesses invest in capital goods (new equipment)
Businesses must hire more workers to build/supply these goods
These newly-employed workers spend & create jobs for others
Businesses eventually slow/stop investing in capital goods
Businesses that create capital goods lay off workers due to lack of demand for their goods
Laid of workers slow/stop spending (due to a lack of disposable income)
Lack of spending forces other business to slow production & lay off workers

15. How do economists know which stage of the business cycle we are in (or are about to enter)?

16. Average weekly hours (manufacturing) —

17. Average weekly hours (manufacturing) — Adjustments to the working hours of existing employees are usually made prior to new hires or layoffs. Employers will decrease hours of employees before layoffs are made. Employers will increase hours before hiring new employees.

18. Average weekly hours (manufacturing) — Adjustments to the working hours of existing employees are usually made prior to new hires or layoffs. Employers will decrease hours of employees before layoffs are made. Employers will increase hours before hiring new employees.
Manufacturers' new orders for consumer goods/materials —

19. Average weekly hours (manufacturing) — Adjustments to the working hours of existing employees are usually made prior to new hires or layoffs. Employers will decrease hours of employees before layoffs are made. Employers will increase hours before hiring new employees.
Manufacturers' new orders for consumer goods/materials — Increases in new orders for consumer goods (durable goods) and materials usually lead to positive changes in actual production. The new orders decrease inventory and contribute to unfilled orders, which means manufacturers must produce more.

20. Average weekly hours (manufacturing) — Adjustments to the working hours of existing employees are usually made prior to new hires or layoffs. Employers will decrease hours of employees before layoffs are made. Employers will increase hours before hiring new employees.
Manufacturers' new orders for consumer goods/materials — Increases in new orders for consumer goods (durable goods) and materials usually lead to positive changes in actual production. The new orders decrease inventory and contribute to unfilled orders, which means manufacturers must produce more.
Manufacturers' new orders for non-defense capital goods —

21. Average weekly hours (manufacturing) — Adjustments to the working hours of existing employees are usually made prior to new hires or layoffs. Employers will decrease hours of employees before layoffs are made. Employers will increase hours before hiring new employees.
Manufacturers' new orders for consumer goods/materials — Increases in new orders for consumer goods (durable goods) and materials usually lead to positive changes in actual production. The new orders decrease inventory and contribute to unfilled orders, which means manufacturers must produce more.
Manufacturers' new orders for non-defense capital goods — Increases in new orders for capital goods (machinery) occurs prior to increases in actual production. When manufacturers receive fewer orders for capital goods, this usually indicates that business production will decrease.

22. Average weekly hours (manufacturing) — Adjustments to the working hours of existing employees are usually made prior to new hires or layoffs. Employers will decrease hours of employees before layoffs are made. Employers will increase hours before hiring new employees.
Manufacturers' new orders for consumer goods/materials — Increases in new orders for consumer goods (durable goods) and materials usually lead to positive changes in actual production. The new orders decrease inventory and contribute to unfilled orders, which means manufacturers must produce more.
Manufacturers' new orders for non-defense capital goods — Increases in new orders for capital goods (machinery) occurs prior to increases in actual production. When manufacturers receive fewer orders for capital goods, this usually indicates that business production will decrease.
Building permits for new private housing units –

23. Average weekly hours (manufacturing) — Adjustments to the working hours of existing employees are usually made prior to new hires or layoffs. Employers will decrease hours of employees before layoffs are made. Employers will increase hours before hiring new employees.
Manufacturers' new orders for consumer goods/materials — Increases in new orders for consumer goods (durable goods) and materials usually lead to positive changes in actual production. The new orders decrease inventory and contribute to unfilled orders, which means manufacturers must produce more.
Manufacturers' new orders for non-defense capital goods — Increases in new orders for capital goods (machinery) occurs prior to increases in actual production. When manufacturers receive fewer orders for capital goods, this usually indicates that business production will decrease.
Building permits for new private housing units – Builders must apply for, and receive, a building permit before construction can begin.

24. Average weekly hours (manufacturing) — Adjustments to the working hours of existing employees are usually made prior to new hires or layoffs. Employers will decrease hours of employees before layoffs are made. Employers will increase hours before hiring new employees.
Manufacturers' new orders for consumer goods/materials — Increases in new orders for consumer goods (durable goods) and materials usually lead to positive changes in actual production. The new orders decrease inventory and contribute to unfilled orders, which means manufacturers must produce more.
Manufacturers' new orders for non-defense capital goods — Increases in new orders for capital goods (machinery) occurs prior to increases in actual production. When manufacturers receive fewer orders for capital goods, this usually indicates that business production will decrease.
Building permits for new private housing units – Builders must apply for, and receive, a building permit before construction can begin.
The Standard & Poor's 500 stock index —

25. Average weekly hours (manufacturing) — Adjustments to the working hours of existing employees are usually made prior to new hires or layoffs. Employers will decrease hours of employees before layoffs are made. Employers will increase hours before hiring new employees.
Manufacturers' new orders for consumer goods/materials — Increases in new orders for consumer goods (durable goods) and materials usually lead to positive changes in actual production. The new orders decrease inventory and contribute to unfilled orders, which means manufacturers must produce more.
Manufacturers' new orders for non-defense capital goods — Increases in new orders for capital goods (machinery) occurs prior to increases in actual production. When manufacturers receive fewer orders for capital goods, this usually indicates that business production will decrease.
Building permits for new private housing units – Builders must apply for, and receive, a building permit before construction can begin.
The Standard & Poor's 500 stock index — The S&P 500 is considered a leading indicator because changes in stock prices reflect investor's expectations for the future of the economy.

26. Average weekly hours (manufacturing) — Adjustments to the working hours of existing employees are usually made prior to new hires or layoffs. Employers will decrease hours of employees before layoffs are made. Employers will increase hours before hiring new employees.
Manufacturers' new orders for consumer goods/materials — Increases in new orders for consumer goods (durable goods) and materials usually lead to positive changes in actual production. The new orders decrease inventory and contribute to unfilled orders, which means manufacturers must produce more.
Manufacturers' new orders for non-defense capital goods — Increases in new orders for capital goods (machinery) occurs prior to increases in actual production. When manufacturers receive fewer orders for capital goods, this usually indicates that business production will decrease.
Building permits for new private housing units – Builders must apply for, and receive, a building permit before construction can begin.
The Standard & Poor's 500 stock index — The S&P 500 is considered a leading indicator because changes in stock prices reflect investor's expectations for the future of the economy.
Index of consumer expectations —

27. Average weekly hours (manufacturing) — Adjustments to the working hours of existing employees are usually made prior to new hires or layoffs. Employers will decrease hours of employees before layoffs are made. Employers will increase hours before hiring new employees.
Manufacturers' new orders for consumer goods/materials — Increases in new orders for consumer goods (durable goods) and materials usually lead to positive changes in actual production. The new orders decrease inventory and contribute to unfilled orders, which means manufacturers must produce more.
Manufacturers' new orders for non-defense capital goods — Increases in new orders for capital goods (machinery) occurs prior to increases in actual production. When manufacturers receive fewer orders for capital goods, this usually indicates that business production will decrease.
Building permits for new private housing units – Builders must apply for, and receive, a building permit before construction can begin.
The Standard & Poor's 500 stock index — The S&P 500 is considered a leading indicator because changes in stock prices reflect investor's expectations for the future of the economy.
Index of consumer expectations — This component leads the business cycle because consumer expectations can indicate future consumer spending or tightening. The data for this component comes from the University of Michigan's Survey Research Center, and is released once a month.

30. Why is consumer confidence so important for the U.S. economy?

32. Summarizer: Word Splash Use each of the words below in sentence and paragraph form. Underline each word as you use it.
Business Cycle
Real GDP
Expansion
Unemployment
Leading Indicator
Consumer Confidence
Recession