Haley Araki Owen Chen Richard Cheng Peter Shao The Recession is Over

Stock Markets Up 70% 6,547 on 3/9/09 11,205 on 4/26/10 Up 70%

Interest rate Money Demand Quantity of Money Money Supply Investment Demand Investment Interest rate

Nonfarm Employment (thousands, SAAR) Unemployment Rate (%)

Labor Force (thousands)

Capacity Utilization Rate (percent) April % April %

Retail Sales ($ Billions, SAAR) Up 6%

New Home Sales (thousands, SAAR) U.S. Census Bureau

Building Permits (thousands, SAAR) + 29%

DJIA6,547 points10,000+ points GDP-6.5%3.6% Capacity Utilization69.5%73.6% Retail Sales$344 billion$364.6 billion New Home Sales337,000411,000 Building Permits523,000685,000 Summary The recovery is clearly gaining traction as shown by the indicators above, which are just a representation of the myriad of indicators demonstrating positive trends.

Ventura County Star, May 22, 2010, page A16 However, the European debt crisis may slow the recovery

What’s Happening in Europe European Union GDP Growth Rate

Frankfurt Stock Exchange (DAX index) Up nearly 30%

European Industrial Production Index 2005 = 100

PIIGS PIIGS - Portugal, Italy, Ireland, Greece, Spain Greece’s debt to GDP ratio is at 115% Germany’s debt to GDP ratio is at 69% Insurance premiums have increased eight-fold since ‘08 Credit-default swaps linked to Greek government bonds have surged to record highs, signaling investors perceive them to be the world’s riskiest debt.

Ten-Year Bond Yield Spreads Greek 10 year rate up to 9.76% Spread to German Bunds also rises to over 400 basis points In late April 2010, the 10-year Greek bond yield rose 164 basis points to nearly 12 percent. The spread exceeded 900 basis points over the German bond yield.

Value of the Euro Fears of possible default push Euro down 20% since 2008 Fears of possible default push Euro down 20% since 2008 However, the European Commission forecasts a comeback after the bailout However, the European Commission forecasts a comeback after the bailout $/ €

Future of the Euro May 7 - ECB and IMF approved a $1 trillion bailout May 7 - ECB and IMF approved a $1 trillion bailout Euro shot up by $0.015 in one day after bailout announcement Euro shot up by $0.015 in one day after bailout announcement Over time, as fears of default subside, the strength of the Euro should increase, bolstering US exports to Europe Over time, as fears of default subside, the strength of the Euro should increase, bolstering US exports to Europe Euro Demand Euro Supply $/€ quantity €/$ Dollar Supply Dollar Demand quantity

Most US economic indicators are showing positive trends The recovery is gaining traction The European debt crisis is causing volatility in global markets due to uncertainty However, the bailout is likely to fix the problem. The Euro is expected to recover US economic growth is unlikely to be significantly impacted The US economy will most likely transition to an expansionary phase by 2011 Conclusion