Final Project Milestone One: Macroeconomic Data Report

Ten-Year Period of U.S. Economic History Overview

The United States started off the decade going into a recession. (U of Cal Berkley, 2011).Reagan era tax cuts and stimulus helped turn the economy around robustly U of Cal Berkley, 2011).Increase in military spending and tax cuts thus created an increased federal deficit (Moffatt, M. 2018) .Unemployment rates hit above 10%, highest since the great depression (Auxier, R. 2010).The federal reserve took control and continued to lower interest rates from record highs to double digit drops (Amadeo, K. 2019).The fall of the U.S.S.R and Eastern European Communism created new trade opportunities (U.S. Dept of State, n.d)The U.S. Support of the Mujahideen in Afghanistan played a healthy role in the demise of the U.S.S.R’s economic collapse Hilton, R. n.d.).

United States GDP From January 01, 1980 to December 31, 1989 (FRED, 2017)

19813,377,600,000 / 6,585,127,000 X 100 = 51.319823,674,500,000 / 6,802,497,000 x 100 = 54Level Increase from 1981 to 1982(54-51.3 / 51.3 X 100 = 5.3 % 5.3% Price Level Increase from Jan 1, 1981 to Dec 31, 1982

GDP Price Deflator During Recession For Years 1981-1982

Consumption: 3,076,279,000Investment: 892,176, 000,000Government Purchases: 42,627,000,000Net Exports: -144,770,000,000GDP 790,033, 000, 000

1987 GDP formula for the largest defense spending of the decade.

Unemployment and Inflation of the 1980’s (FRED 2017)

Unemployment

Inflation

Unemployment and Inflation

Pricing indexes are used to adjust for inflationInflation is calculated using consumer pricing indexes.The annual inflation rate for a given year is the percent change from the previous year, when using the consumer price index. CPI =𝐸𝑥𝑝𝑒𝑛𝑑𝑖𝑡𝑢𝑟𝑒𝑠 𝑜𝑓 𝑡h𝑒 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑦𝑒𝑎𝑟𝐸𝑥𝑝𝑒𝑛𝑑𝑖𝑡𝑢𝑟𝑒𝑠 𝑜𝑓 𝑡h𝑒 𝑏𝑎𝑠𝑒 𝑦𝑒𝑎𝑟𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑢𝑛𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑑𝐿𝑎𝑏𝑜𝑟 𝑓𝑜𝑟𝑐𝑒 X 100 = Unemployment rateUnemployment and CPI affect growth of GDP

Pricing indexes are used to adjust for inflationInflation is calculated using consumer pricing indexes.The annual inflation rate for a given year is the percent change from the previous year, when using the consumer price index. The formula for unemployment rate is: Unemployment Rate = Number of Unemployed Persons / Labor Force

Federal Funds Rate

Interest Rates

High Inflation periods are countered by the Federal Funds Rate to encourage open market operations.Lower interest rates affect how foreign investors spent their moneyThe Federal Funds Rate manages GDP growth to maintain inflation.

References

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FRED (2017) Nominal Potential Gross Domestic Product. Retrieved from, https://fred.stlouisfed.org/series/NGDPPOTFRED (2017) Real Gross Domestic Product. Retrieved from, https://fred.stlouisfed.org/series/GDPC96/FRED (2017) Consumer Price Index for All Urban Consumers: All Items. Retrieved from, https://fred.stlouisfed.org/series/CPIAUCSL#0FRED (2017) Producer Price Index for All Commodities, Retrieved from, https://fred.stlouisfed.org/series/PPIACOFRED (2017) Effective Federal Funds Rate. Retrieved from, https://fred.stlouisfed.org/series/DFFFRED (2017) Real Gross Domestic Product. Retrieved from, https://fred.stlouisfed.org/series/GDPC96/FRED (2017) Civilian Unemployment Rate. Retrieved from, https://fred.stlouisfed.org/series/UNRATEGriswold, Daniel (2016) Interest Rates, the Dollar, and US Trade Flows. Retrieved from, https://www.mercatus.org/publications/monetary-policy/interest-rates-dollar-and-us-trade-flowsHubbard, Glenn. O’brien, Patrick. (2015) Macroeconomics Fifth Edition CH 9 Unemployment & Inflation, retrieved from, https://etext.pearson.com/eplayer/pdfbook?bookid=45956&userid=24412899&smsuserid=94543850&languageid=1&roletypeid=2&scenario=11&sessionid=3bbeafacb264372e69ff37653b884b0c&invoketype=et1&bookserver=1&platform=1030&uid=20180302102228&ubd=20190426205126&ubsd=20190426205126&pagenumber=1&hsid=0227c4f6111e6a0471d9974848624956Infoplease (2019) U.S. Military Spending, 1946–2009. Retrieved from, https://www.infoplease.com/us/military-personnel/us-military-spending-1946-2009Segal, Troy (2018) What are the implications of a low federal funds rate? Retrieved from, https://www.investopedia.com/ask/answers/032715/what-are-implications-low-federal-funds-rate.aspU.S. Department of State (n.d) The U.S. Economy: A Brief History. Retrieved from, https://usa.usembassy.de/etexts/oecon/chap3.htmWolfe, Michael (2017) The Effect of Real GDP on Interest Rate. Retrieved from, https://bizfluent.com/about-6632885-effect-real-gdp-interest-rate.html