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 9,854,300
1985 6,849,300 1998 10,283,500
1986 7,086,500 1999 10,779,800
1987 7,313,300 2000 11,226,000
1988 7,613,900 2001 11,347,200
1989 7,855,900 2002 11,553,000
1990 8,033,900 2003 11,840,700
1991 8,015,100 2004 12,263,800
1992 8,287,100 2005 12,638,400
1993 8,523,400 2006 12,976,200
1994 8,870,700 2007 13,254,100
1995 9,093,700 2008 13,312,200
1996 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 970.43
1985 211.28 1998 1229.23
1986 242.17 1999 1469.25
1987 247.08 2000 1320.28
1988 277.72 2001 1148.08
1989 353.4 2002 879.82
1990 330.22 2003 1111.92
1991 417.09 2004 1211.92
1992 435.71 2005 1248.29
1993 466.45 2006 1418.3
1994 459.27 2007 1468.36
1995 615.93 2008 903.25
1996 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 564825400
1985 138908500 1998 722756800
1986 154548600 1999 909760900
1987 186222200 2000 1232315000
1988 141529000 2001 1303608500
1989 167968000 2002 1289625700
1990 161548000 2003 1312119500
1991 209637600 2004 1449518100
1992 229184500 2005 2057125200
1993 270900000 2006 2462849000
1994 314656600 2007 3363127500
1995 400939500 2008 5320791300
1996 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 105.262
1985 78.337 1998 103.642
1986 79.725 1999 102.756
1987 83.628 2000 102.629
1988 83.654 2001 101.958
1989 86.535 2002 102.259
1990 87.110 2003 98.333
1991 89.799 2004 98.620
1992 91.616 2005 100
1993 94.584 2006 101.04
1994 98.885 2007 100.537
1995 101.200 2008 98.347
1996 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 73.468
1985 56.624 1998 79.518
1986 56.535 1999 87.144
1987 55.939 2000 85.858
1988 58.845 2001 82.053
1989 59.873 2002 91.489
1990 54.408 2003 92.456
1991 48.818 2004 96.193
1992 54.537 2005 100
1993 59.403 2006 98.815
1994 66.69 2007 98.798
1995 66.62 2008 80.384
1996 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 price
1984 79,900 1997 146,000
1985 84,300 1998 152,500
1986 92,000 1999 161,000
1987 104,500 2000 169,000
1988 112,500 2001 175,200
1989 120,000 2002 187,600
1990 122,900 2003 195,000
1991 120,000 2004 221,000
1992 121,500 2005 240,900
1993 126,500 2006 246,500
1994 130,000 2007 247,900
1995 133,900 2008 232,100
1996 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 sold
1984 639 1997 804
1985 688 1998 886
1986 750 1999 880
1987 671 2000 877
1988 676 2001 908
1989 650 2002 973
1990 534 2003 1086
1991 509 2004 1203
1992 610 2005 1283
1993 666 2006 1051
1994 670 2007 776
1995 667 2008 485
1996 757 2009 374
New house market, average price and quantity sold
Decline
Declines
Declines
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
0
1,00
0,00
0,00
0
2,00
0,00
0,00
0
3,00
0,00
0,00
0
4,00
0,00
0,00
00
400
800
1200
1600
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!