Download The Business Cycle

The Business Cycle
Since WWII the U.S.
Economy has grown
on average 3% per
year.
The Business Cycle
Economic Growth
does NOT occur at a
steady, even rate.
The Business Cycle
Economic Growth
changes rates and at
times is negative.
The Business Cycle
These changes in
rates of economic
growth have a pattern
The Business Cycle
The Business Cycle
PEAK
CONTRACTION
EXPANSION
TROUGH
The Business Cycle
PEAK
CONTRACTION
Recession
EXPANSION
Depression
RECOVERY
TROUGH
Business Cycle Dating
• Done by a committee of private/academic
economists
• Federal Government not involved for
political reasons
• Use a variety of data to determine Peaks
and Troughs (month)
• Decisions come months afterward
• http://www.nber.org/cycles.html
Recent Business Cycles
Peak
Trough
July 1981
(III)
Nov 1982
(IV)
July 1990
(III)
March 1991
(I)
March
2001 (I)
Nov. 2001
(IV)
Dec. 2007
(IV)
June 2009
(II)
Contraction Expansion
16 12
8 92
8 120
18 73
Top Ten Expansions
Length
Period
Name
Presidents
Top Ten Expansions
Length
Period
120
3/91 – 3/01
Name
Presidents
Top Ten Expansions
Length
Period
Name
120
3/91 – 3/01
.dotcom
Presidents
Top Ten Expansions
Length
Period
Name
Presidents
120
3/91 – 3/01
.dotcom
B41-C-B43
Top Ten Expansions
Length
Period
Name
Presidents
120
3/91 – 3/01
.dotcom
B41-C-B43
106
2/61 – 12/69
Top Ten Expansions
Length
Period
Name
Presidents
120
3/91 – 3/01
.dotcom
B41-C-B43
106
2/61 – 12/69 Vietnam War
Top Ten Expansions
Length
Period
Name
Presidents
120
3/91 – 3/01
.dotcom
B41-C-B43
106
2/61 – 12/69 Vietnam War
K-LBJ-N
Top Ten Expansions
Length
Period
Name
Presidents
120
3/91 – 3/01
.dotcom
B41-C-B43
106
2/61 – 12/69 Vietnam War
92
11/82 – 7/90
K-LBJ-N
Top Ten Expansions
Length
Period
Name
Presidents
120
3/91 – 3/01
.dotcom
B41-C-B43
106
2/61 – 12/69 Vietnam War
92
11/82 – 7/90
Star Wars
K-LBJ-N
Top Ten Expansions
Length
Period
Name
Presidents
120
3/91 – 3/01
.dotcom
B41-C-B43
106
2/61 – 12/69 Vietnam War
92
11/82 – 7/90
Star Wars
K-LBJ-N
Raygun –B41
Top Ten Expansions
Length
Period
Name
Presidents
120
3/91 – 3/01
.dotcom
B41-C-B43
106
2/61 – 12/69 Vietnam War
92
11/82 – 7/90
80
6/38 – 2/45
Star Wars
K-LBJ-N
Reagan –B41
Top Ten Expansions
Length
Period
Name
Presidents
120
3/91 – 3/01
.dotcom
B41-C-B43
106
2/61 – 12/69 Vietnam War
92
11/82 – 7/90
Star Wars
80
6/38 – 2/45
World War II
K-LBJ-N
Reagan –B41
Top Ten Expansions
Length
Period
Name
Presidents
120
3/91 – 3/01
.dotcom
B41-C-B43
106
2/61 – 12/69 Vietnam War
92
11/82 – 7/90
Star Wars
Reagan –B41
80
6/38 – 2/45
World War II
FDR
K-LBJ-N
Top Ten Expansions
Length
Period
Name
Presidents
120
3/91 – 3/01
.dotcom
B41-C-B43
106
2/61 – 12/69 Vietnam War
92
11/82 – 7/90
Star Wars
Reagan –B41
80
6/38 – 2/45
World War II
FDR
73
11/01 – 12/07
K-LBJ-N
Top Ten Expansions
Length
Period
Name
Presidents
120
3/91 – 3/01
.dotcom
B41-C-B43
106
2/61 – 12/69 Vietnam War
92
11/82 – 7/90
Star Wars
Reagan –B41
80
6/38 – 2/45
World War II
FDR
73
11/01 – 12/07
Iraq War
K-LBJ-N
Top Ten Expansions
Length
Period
Name
Presidents
120
3/91 – 3/01
.dotcom
B41-C-B43
106
2/61 – 12/69 Vietnam War
92
11/82 – 7/90
Star Wars
Reagan –B41
80
6/38 – 2/45
World War II
FDR
73
11/01 – 12/07
Iraq War
G. W. Bush
K-LBJ-N
Top Ten Expansions
Length
Period
Name
Presidents
120
3/91 – 3/01
.dotcom
B41-C-B43
106
2/61 – 12/69 Vietnam War
92
11/82 – 7/90
Star Wars
Reagan –B41
80
6/38 – 2/45
World War II
FDR
73
11/01 – 12/07
Iraq War
G. W. Bush
58
3/75 – 1/80
K-LBJ-N
Top Ten Expansions
Length
Period
Name
Presidents
120
3/91 – 3/01
.dotcom
B41-C-B43
106
2/61 – 12/69 Vietnam War
92
11/82 – 7/90
Star Wars
Reagan –B41
80
6/38 – 2/45
World War II
FDR
73
11/01 – 12/07
Iraq War
G. W. Bush
58
3/75 – 1/80
Disco!
K-LBJ-N
Top Ten Expansions
Length
Period
Name
Presidents
120
3/91 – 3/01
.dotcom
B41-C-B43
106
2/61 – 12/69 Vietnam War
92
11/82 – 7/90
Star Wars
Reagan –B41
80
6/38 – 2/45
World War II
FDR
73
11/01 – 12/07
Iraq War
G. W. Bush
58
3/75 – 1/80
Disco!
Ford – Carter
K-LBJ-N
Top Ten Expansions
Length
Period
Name
Presidents
120
3/91 – 3/01
.dotcom
B41-C-B43
106
2/61 – 12/69 Vietnam War
92
11/82 – 7/90
Star Wars
Reagan –B41
80
6/38 – 2/45
World War II
FDR
73
11/01 – 12/07
Iraq War
G. W. Bush
58
3/75 – 1/80
Disco!
Ford – Carter
50
3/33 – 5/37
K-LBJ-N
Top Ten Expansions
Length
Period
Name
Presidents
120
3/91 – 3/01
.dotcom
B41-C-B43
106
2/61 – 12/69 Vietnam War
92
11/82 – 7/90
Star Wars
Reagan –B41
80
6/38 – 2/45
World War II
FDR
73
11/01 – 12/07
Iraq War
G. W. Bush
58
3/75 – 1/80
Disco!
Ford – Carter
50
3/33 – 5/37
New Deal
K-LBJ-N
Top Ten Expansions
Length
Period
Name
Presidents
120
3/91 – 3/01
.dotcom
B41-C-B43
106
2/61 – 12/69 Vietnam War
92
11/82 – 7/90
Star Wars
Reagan –B41
80
6/38 – 2/45
World War II
FDR
73
11/01 – 12/07
Iraq War
G. W. Bush
58
3/75 – 1/80
Disco!
Ford – Carter
50
3/33 – 5/37
New Deal
FDR
K-LBJ-N
Top Ten Expansions
Length
Period
Name
Presidents
120
3/91 – 3/01
.dotcom
B41-C-B43
106
2/61 – 12/69 Vietnam War
92
11/82 – 7/90
Star Wars
Reagan –B41
80
6/38 – 2/45
World War II
FDR
73
11/01 – 12/07
Iraq War
G. W. Bush
58
3/75 – 1/80
Disco!
Ford – Carter
50
3/33 – 5/37
New Deal
FDR
46
6/1861 – 4/65
K-LBJ-N
Top Ten Expansions
Length
Period
Name
Presidents
120
3/91 – 3/01
.dotcom
B41-C-B43
106
2/61 – 12/69 Vietnam War
92
11/82 – 7/90
Star Wars
Reagan –B41
80
6/38 – 2/45
World War II
FDR
73
11/01 – 12/07
Iraq War
G. W. Bush
58
3/75 – 1/80
Disco!
Ford – Carter
50
3/33 – 5/37
New Deal
FDR
46
6/1861 – 4/65
Civil War
K-LBJ-N
Top Ten Expansions
Length
Period
Name
Presidents
120
3/91 – 3/01
.dotcom
B41-C-B43
106
2/61 – 12/69 Vietnam War
92
11/82 – 7/90
Star Wars
Reagan –B41
80
6/38 – 2/45
World War II
FDR
73
11/01 – 12/07
Iraq War
G. W. Bush
58
3/75 – 1/80
Disco!
Ford – Carter
50
3/33 – 5/37
New Deal
FDR
46
6/1861 – 4/65
Civil War
Lincoln
K-LBJ-N
Top Ten Expansions
Length
Period
Name
Presidents
120
3/91 – 3/01
.dotcom
B41-C-B43
106
2/61 – 12/69 Vietnam War
92
11/82 – 7/90
Star Wars
Reagan –B41
80
6/38 – 2/45
World War II
FDR
73
11/01 – 12/07
Iraq War
G. W. Bush
58
3/75 – 1/80
Disco!
Ford – Carter
50
3/33 – 5/37
New Deal
FDR
46
6/1861 – 4/65
Civil War
Lincoln
45
10/49 – 7/53
K-LBJ-N
Top Ten Expansions
Length
Period
Name
Presidents
120
3/91 – 3/01
.dotcom
B41-C-B43
106
2/61 – 12/69 Vietnam War
92
11/82 – 7/90
Star Wars
Reagan –B41
80
6/38 – 2/45
World War II
FDR
73
11/01 – 12/07
Iraq War
G. W. Bush
58
3/75 – 1/80
Disco!
Ford – Carter
50
3/33 – 5/37
New Deal
FDR
46
6/1861 – 4/65
Civil War
Lincoln
45
10/49 – 7/53
Korean War
K-LBJ-N
Top Ten Expansions
Length
Period
Name
Presidents
120
3/91 – 3/01
.dotcom
B41-C-B43
106
2/61 – 12/69 Vietnam War
92
11/82 – 7/90
Star Wars
Reagan –B41
80
6/38 – 2/45
World War II
FDR
73
11/01 – 12/07
Iraq War
G. W. Bush
58
3/75 – 1/80
Disco!
Ford – Carter
50
3/33 – 5/37
New Deal
FDR
46
6/1861 – 4/65
Civil War
Lincoln
45
10/49 – 7/53
Korean War
Truman-Ike
K-LBJ-N
Top Ten Expansions
Length
Period
Name
Presidents
120
3/91 – 3/01
.dotcom
B41-C-B43
106
2/61 – 12/69 Vietnam War
92
11/82 – 7/90
Star Wars
Reagan –B41
80
6/38 – 2/45
World War II
FDR
73
11/01 – 12/07
Iraq War
G. W. Bush
58
3/75 – 1/80
Disco!
Ford – Carter
50
3/33 – 5/37
New Deal
FDR
46
6/1861 – 4/65
Civil War
Lincoln
45
10/49 – 7/53
Korean War
Truman-Ike
44
12/14 – 8/18
K-LBJ-N
Top Ten Expansions
Length
Period
Name
Presidents
120
3/91 – 3/01
.dotcom
B41-C-B43
106
2/61 – 12/69 Vietnam War
92
11/82 – 7/90
Star Wars
Reagan –B41
80
6/38 – 2/45
World War II
FDR
73
11/01 – 12/07
Iraq War
G. W. Bush
58
3/75 – 1/80
Disco!
Ford – Carter
50
3/33 – 5/37
New Deal
FDR
46
6/1861 – 4/65
Civil War
Lincoln
45
10/49 – 7/53
Korean War
Truman-Ike
44
12/14 – 8/18
Great War
K-LBJ-N
Top Ten Expansions
Length
Period
Name
Presidents
120
3/91 – 3/01
.dotcom
B41-C-B43
106
2/61 – 12/69 Vietnam War
92
11/82 – 7/90
Star Wars
Reagan –B41
80
6/38 – 2/45
World War II
FDR
73
11/01 – 12/07
Iraq War
G. W. Bush
58
3/75 – 1/80
Disco!
Ford – Carter
50
3/33 – 5/37
New Deal
FDR
46
6/1861 – 4/65
Civil War
Lincoln
45
10/49 – 7/53
Korean War
Truman-Ike
44
12/14 – 8/18
Great War
Wilson
K-LBJ-N
Top Ten Expansions
Length
Period
Name
Presidents
120
3/91 – 3/01
.dotcom
B41-C-B43
106
2/61 – 12/69 Vietnam War
92
11/82 – 7/90
Star Wars
Reagan –B41
80
6/38 – 2/45
World War II
FDR
73
11/01 – 12/07
Iraq War
G. W. Bush
58
3/75 – 1/80
Disco!
Ford – Carter
50
3/33 – 5/37
New Deal
FDR
46
6/1861 – 4/65
Civil War
Lincoln
45
10/49 – 7/53
Korean War
Truman-Ike
44
12/14 – 8/18
Great War
Wilson
K-LBJ-N
Top Ten Expansions
Length
Period
Name
Presidents
120
3/91 – 3/01
.dotcom
B41-C-B43
106
2/61 – 12/69 Vietnam War
92
11/82 – 7/90
Star Wars
Reagan –B41
80
6/38 – 2/45
World War II
FDR
73
11/01 – 12/07
Iraq War
G. W. Bush
58
3/75 – 1/80
Disco!
Ford – Carter
50
3/33 – 5/37
New Deal
FDR
46
6/1861 – 4/65
Civil War
Lincoln
45
10/49 – 7/53
Korean War
Truman-Ike
44
12/14 – 8/18
Great War
Wilson
K-LBJ-N
Top Ten Expansions
Length
Period
Name
Presidents
120
3/91 – 3/01
.dotcom
B41-C-B43
106
2/61 – 12/69 Vietnam War
92
11/82 – 7/90
Star Wars
Reagan –B41
80
6/38 – 2/45
World War II
FDR
73
11/01 – 12/07
Iraq War
G. W. Bush
58
3/75 – 1/80
Disco!
Ford – Carter
50
3/33 – 5/37
New Deal
FDR
46
6/1861 – 4/65
Civil War
Lincoln
45
10/49 – 7/53
Korean War
Truman-Ike
44
12/14 – 8/18
Great War
Wilson
K-LBJ-N
Changes in Business Cycles
Period
Expansion Contraction
1854-1919
27
22
1945 – 2007
59
11
27 months
22 months
49 months
Just over 4 years
11 months
59 months
70 months
Just under 6 years
Expansion
Contraction
Recovery
18 94
99
-1
90
0
19
07
-0
8
19
13
-1
4
19
20
-2
1
19
26
-2
7
19
37
-3
8
19
48
-4
9
19
57
-5
8
19
69
-7
0
19
80
-8
0
19
90
-9
1
20
07
-0
9
-8
8
40
18
93
18
87
18
-7
9
10
-6
7
-5
8
20
18
73
18
65
18
57
Months
65
60
50
43
38
32
30
23
18
13
8
24
23
17 18 18
13
14 13
7
World War Two
World War II
Business Cycles Since WWII
• Recessions have become shorter
U.S. Contractions
70
18
16
10
8
11
10
10
16
18
13
8
11
6
8
8
0
Business Cycles Since WWII
• Expansions have become longer
140
120
120
World War Two
106
100
92
80
New Deal
80
73
58
60
50
46
40
34
37
36
27
22
22
18
24
20
18
27
21
22
19
12
0
39
36
33
30
20
45
44
10
21
24
12
Business Cycles Since WWII
• Recessions have become shorter
– Most recent recession was 18 months - longest since Grt. Dep.
• Expansions have become longer
– Recovery and expansion phases
• Business cycles have become longer
– 6 of the top 10 expansions have been since WWII
– World War II & New Deal are also Top 10
– 11 of top 15 are New Deal & after (only 2 of 13 are not top 15)
• Change is due to the involvement of the Federal
Government in the national economy
– No longer laissez –faire
– Fiscal & Monetary Policies are used to control Business Cycle