XiaoZhen Chen Hai Tran Ng Man 1

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 What is a recession?  A Recession is a period of general economic decline; typically defined as a decline in GDP for two or more consecutive quarters.  A Recession is typically accompanied by a drop in the stock market, an increase in unemployment, and a decline in the housing market. 3

 Recession is a significant decline in activity across the economy, lasting longer than a few months.  Recession is a normal (albeit unpleasant) part of the business cycle; however, one-time crisis events can often trigger the onset of a recession. 4

 A Recession is generally considered less severe than a depression, and if a recession continues long enough it is often then classified as a depression.  There is no one obvious cause of a recession, although overall blame generally falls on the federal leadership, often either the president himself, the head of the Federal Reserve, or the entire administration. 5

 When did the recent recession begin?  According to CNN.com. The National Bureau of Economic Research declares that the recession begin Dec,

 When did the recent recession end?  The recession officially ended in June 2009, according to the Business Cycle Dating Committee of the National Bureau of Economic Research, the official arbiter of such dataes. 7

 GDP declines  House market collapse: Falling housing prices and sales  Industrial output and sales declines  Drop-off in business investment  Slowdown in retail sales  Banks collapse  Many company out of business cause high unemployment 8

 Job lost, unemployment increase.  Oil shock.  Job losses and employer cutbacks in hours worked, was sufficient to cause the level of payroll employment to erode enough so that the start date of recession was pushed up to November-December 2007, some four to five months sooner than it might have done otherwise as the outcome of the oil shock. 9

 Reason that show the end of Recession.  According to the committee, such indicator as gross domestic product and industrial production appear to have bottomed out in June 2009  The committee determined that a trough in business activity occurred in the U.S. economy in June 2009  The committee said that the trough marks the end of the recession that began in December 2007 and the beginning of an expansion. 10

 The committee determine that a trough occurred in June 2009, and determined only that the recession ended and a recovery began in that month.  The trough marks the end of the declining phase and the start of the rising phase of the business cycle. 11

 The NBER committee made its determination after considering numerous economic data and concluding that several key measures of economic activity — including total output and industrial production — pointed to June 2009 as the trough of that business cycle. 12

 The economy started growing again in the July- to-September quarter of 2009, after a record four straight quarters of declines. Thus, the April-to-June quarter of 2009, marked the last quarter when the economy was shrinking. At that time, it contracted just 0.7 percent, after suffering through much deeper declines. That factored into the NBER's decision to pinpoint the end of the recession in June. 13

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 According to the above graphs, we could see that GDP, Personal income, Industrial production index, Retail sales and food services and employees are slightly change to positive in Mid

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 The demand for new homes during recession. 21

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 According to the graph, the demand for the new homes is decreasing during the recent recession( ) 24

 Demand for existing homes 25

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 According to the graph, we could see that the sale of existing home is decreasing during recession, although it has a slightly change to increase during 2008 but it falls again quickly in 2008 to decrease on sale of the existing homes during recession. ( ) 27

 Supply of new homes 28

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 According to the above data, the supply of new homes seems to increase during recent recession. ( ) 30

 Supply of existing homes 31

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 According to the above data, the supply of the existing homes seem to increasing during recent recession. ( ) 33

 Are the market for new homes and the market for existing homes related? How? Explain.  From my point of view, they are related. For example, If there was 1000 buyers in the market looking for a house to buy and they are only buying one for living. One more of those buyer buy an existing home that means one less person will buy a new home. Therefore, If 500 of them buy a new home, that means only 500 of them will buy an existing home. If there is no existing home available, Those 500 buyer who buy an existing home might look for a new home to buy, then the demand for new home will increase. 34

 Furthermore, If there was so many existing homes in the market that was unable to sold out. Those facts will effect the market for new homes because buyer will compare the price of the two and will buy the cheaper one. That means the existing home market will effect the new home market. 35

 Moreover, If the company who build the house knows that there was so many home in the market that unable to sold out, they might build less of the new homes. They build less of the new homes because they will affect that their new home might unable to sold out as well. 36

 Finally, the price of the two will effect. If there was so many existing homes in the market, the new home price will effect because if the new home price is so high, people will decide to buy the existing homes. Conversely, if the price of the new homes are high, the existing home price could increase as well. And If there is less new home build, the existing home price could increase. 37

 On the other hand, they might not related. For example, if people who is looking for only the new home to buy and won’t consider the price or other factor of the existing homes; then there was not related between the market for new and existing homes. But overall, I believed they are related. 38

yearsQuantity of new homes sales

40 Recession

YearQuantity of existing home sales

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 According to the above data, The quantity of new and existing homes sale seem to increase the quantity from , then decrease the quantity of homes sale from  The quantity of existing homes sale is six times more than the quantity of new homes sale. 44

year price

46 Recession

year price of existing homes

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49 Recession

 The price of new and existing home is increasing from and start to decrease from  The new home price is higher than the existing home price at all time by a few thousands. 50

yearDollars in Billions

52 Recession

year Dollars in Billions

54 Recession

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 GDP is increasing from and decrease during  Residential Fixed investment is increasing from and decreasing from  GDP is higher at all time than Residential Fixed investment. 56

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58 P ($) Q (units) E_2000 E_2009 E_2005 Demand and supply of new homes from 2000 to 2009

 From 2000 to 2005: ◦ Demand of new house increases, shift the demand curve to right. ◦ Supply of new house did not change. ◦ The equilibrium price increases and equilibrium quantity of new house increases. 59

 From 2005 to 2009 ◦ Demand of new house decreases, shift the demand curve to left. ◦ Supply of new house decrease, shift the supply curve to left. ◦ The equilibrium price decreases and equilibrium quantity of new house decreases. 60

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62 E_2009 E_2000 E_2005 D_2000 D_2009 D_2005 S_2009 S_2000 P ($) Q (units) Demand and supply of existing homes from 2000 to 2009

 From 2000 to 2005: ◦ Demand of existing house increases, shift the demand curve to right. ◦ Supply of existing house did not change. ◦ The equilibrium price increases and equilibrium quantity of existing house increases. 63

 From 2005 to 2009 ◦ Demand of existing house decreases, shift the demand curve to left. ◦ Supply of existing house decrease, shift the supply curve to left. ◦ The equilibrium price decreases and equilibrium quantity of existing house decreases. 64

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YearQuantity (units)Price ($) Demand and supply of new homes from 2006 to 2009

67 E_2009 E_2006 E_2007 E_2008 S_2009 S_2006 S_2007 D_2009 D_2008 D_2007 D_2006 P ($) Q (units) Demand and supply of new homes from 2006 to 2009

 From 2006 to 2007 ◦ Quantity of new house decrease. ◦ Price of new house increase. ◦ Supply decreases, shift the curve to left. ◦ Demand decreases, shift the curve to left. ◦ Supply dominates demand in the market of new house. 68

 From 2007 to 2008 ◦ Quantity of new house decrease. ◦ Price of new house decrease. ◦ Demand decreases, shift the demand curve to left. ◦ Supply increases, shift the demand curve to right. ◦ Demand dominates supply in the market of new house. 69

 From 2008 to 2009 ◦ Quantity of new house decrease. ◦ Price of new house decrease. ◦ Supply increases, shift the curve to right. ◦ Demand decreases, shift the curve to left. ◦ Demand dominates supply in the market of new house. 70

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YearQuantity (units)Price ($) Demand and supply of existing homes from 2006 to 2009

73 P ($) Q (units) E_2006 E_2007 E_200 8 E_2009 S_2006 S_2008 D_200 6 D_200 7 D_200 8 Demand and supply of existing homes from 2006 to 2009

 From 2006 to 2007: ◦ Quantity of existing house decrease. ◦ Price of existing house decrease. ◦ Supply increases, shift the curve to right. ◦ Demand decreases, shift the curve to left. ◦ Demand dominates supply in the market of existing house. 74

 From 2007 to 2008: ◦ Quantity of existing house decrease. ◦ Price of existing house decrease. ◦ Supply did not change. ◦ Demand decreases, shift the curve to left. ◦ Demand dominates supply in the market of existing house. 75

 From 2008 to 2009: ◦ Quantity of existing house increase. ◦ Price of existing house decrease. ◦ Supply decreases, shift the curve to left. ◦ Demand did not change. ◦ Supply dominates demand in the market of existing house. 76

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