MACROECONOMY AND ECONOMIC POLICY MEASURES OF THE MACROECONOMY CHANGES IN THE MACROECONOMY POLICIES TO AFFECT THE MACROECONOMY

GROSS DOMESTIC PRODUCT PROBLEM: HOW TO COMBINE ALL THE DIVERSE PRODUCTS AND SERVICES IN THE ECONOMY SOLUTION: MEASURE THEIR ANNUAL MARKET (SALES) VALUE, AND COMBINE RESULT IS CALLED (REAL) GROSS DOMESTIC PRODUCT, OR GDP REAL: VALUES ARE ADJUSTED FOR INFLATION OVER TIME

PROBLEM – CAN OVER-COUNT IF COUNT MARKET VALUE OF EVERY PRODUCT AND SERVICE, WILL “OVER- COUNT” FOR THOSE THAT ARE INPUTS INTO OTHER PRODUCTS AND SERVICES EXAMPLE: IF COUNT LUMBER SALES, VALUE WILL ALSO BE COUNTED IN SALES VALUE OF HOMES

SOLUTION EITHER COUNT ONLY “SALES TO FINAL USERS” – LIKE RETAIL SALES TO CONSUMERS AND SIMILAR SALES TO BUSINESSES OR COUNT “VALUE-ADDED” AT EACH STAGE OF PRODUCTION

RESULT – US GDP IS LARGEST IN WORLD AS A SINGLE COUNTRY ($16 TRILLION)

GDP VERSUS GNP GDP (GROSS DOMESTIC PRODUCT) – COUNTS VALUES MADE WITHIN LEGAL BORDERS OF U.S., IRREGARDLESS OF WHETHER COMPANIES ARE U.S. OR FOREIGN OWNED GNP (GROSS NATIONAL PRODUCT) – COUNTS VALUES MADE ONLY BY U.S. COMPANIES, BUT ANYWHERE IN THE WORLD

PROBLEMS WITH GDP ONLY INCLUDE IF MONEY CHANGES HANDS BARTERING NOT COUNTED LEISURE (ENJOYMENT OF DOING NOTHING) NOT COUNTED DAMAGE DONE IN PRODUCTION (POLLUTION) NOT SUBTRACTED

USE GROWTH IN GDP TO TRACK TRENDS IN THE ECONOMY

TRACKING THE UPS AND DOWNS OF THE ECONOMIC “ROLLERCOASTER” CALLED THE “BUSINESS CYCLE” TOP OF THE CYCLE: “PEAK” BOTTOM OF THE CYCLE: “TROUGH” GDP GROWING: EXPANSION, OR RECOVERY GDP FALLING FOR AT LEAST 6 CONSECUTIVE MONTHS: RECESSION GDP FALLING BY MORE THAN 10% OR LONGER THAN 3 YEARS: DEPRESSION

TRACKING UNEMPLOYMENT COUNTING PEOPLE WHO ARE NOT WORKING FOR PAY HOUSEHOLD SURVEY – SURVEYS AT THEIR HOMES PAYROLL SURVEY – SURVEYS JOBS AT BUSINESSES

TO BE COUNTED AS UNEMPLOYED BY THE “HEADLINE” UNEMPLOYMENT RATE MUST MEET THREE TESTS: 1. NOT WORKING FOR PAY 2. WANT TO WORK FOR PAY 3. “ACTIVELY” LOOKING FOR WORK IF NOT #3, NOT COUNTED AS UNEMPLOYED – NOT COUNTED IN “HEADLINE” JOB STATISTIC! CALLED DISCOURAGED WORKERS

TRENDS IN NORTH CAROLINA’S ALTERNATIVE UNEMPLOYMENT RATES

TYPES OF UNEMPLOYMENT FRICTIONAL – PEOPLE BETWEEN JOBS; NOT A WORRY CYCLICAL - RELATED TO THE BUSINESS CYCLE – UP IN RECESSIONS; DOWN IN EXPANSIONS STRUCTURAL - OCCURS BECAUSE PEOPLE DON’T HAVE SKILLS NEEDED BY BUSINESSES – MOST DIFFICULT TYPE OF UNEMPLOYMENT

CURRENT ISSUES IN THE JOB MARKET UNEMPLOYED WORKERS GIVING UP JOBS BEING REPLACED BY MACHINES AND TECHNOLOGY SKILLS MIS-MATCH GAP BETWEEN THOSE WITH GOOD- PAYING JOBS AND JOBLESS OR LOW- PAYING JOBS