I. Business Cycles 5 video
II. Unemployment 6
III. Inflation
IV. History 8
V. Are Wages Stagnant? 1
VI. Readings
VII. Visual Learners 


Current Short and Longer-term Economic Questions

US/Biden Battle Inflation

Related Quick Studies

FED's Forecasting Game

M. Blyth: The New Normal

Chapter 9 Test Review


Lecture Notes

I. Business Cycles

     A. Fluctuations follows a cycle

     B. Recession: two  consecutive quarters of negative Real GDP

     C. Is GDP a good measure economic success? 

   D. Causes
              1. Inventory Recession

                2. Endogenous Shoc
not foreseen by economic models oil embargo recessions of the 1970's.

               3. Rolling Recession         

Political Economy Stuff

Cycles are a Norm of Capitalism


     4. Balance sheet recession: private sector debt causes a focus on paying down debt
         which lowers aggregate demand and substantially lowering economic growth.  
         a. Causes of the Great Recession
         b. An Historical Perspective on the Crisis of 2007-08
         c. Often require a central bank to act as a Lender of last resort 
5. Innovation Cycle: railroads, computers, bio-technology  cause growth/crash
      6. Political Events: wars, international trade
      7. Misuse of Monetary and Fiscal Policy: government creates, borrows and or
          spends an incorrect amount of money to moderate economic activity.
          a. Well run economies like Taiwan, Japan and the U.S. are all recently guilty.
          b. Some feel Chain's authoritarian government which has successfully navigated growth
              for 30 years will again steer clear of catastrophe but  Ruchir Sharma's 2016 book
              The Rise and Fall of Nations: Ten Rules of Change in the Post-Crisis World’, thinks
              they are in Deep Do Do, or D3 for math people.
     8. Non-cyclical Fluctuations
         a. Seasonal variation: Christmas buying rush, spring construction 
         b. Long-Term Secular Trends: the expansion or contraction in the
             level of economic activity over a long period of years (the dark ages, the industrial revolution)
            1) Long Waves Theories of Development from Professor Kunter Krumme,
            2) Call this a Recession, At Least It is Not the Dark Ages

     3) Generations and The Fourth Turning
     9. National Bureau of Economic Research determine recessions
   10. David Rosenberg key policy determinates
         a. Real Business Sales
         b. Industrial Production
         c. Organic Real Personal Income: PI  excluding government transfers
         d. Employment
inflation matrix excluding imputed government adjustments



        11. Abbott and Costello Explain the Unemployment Situation
            12. Action to Stop Recent Recessions, NYT

    E. Cycle Theory videos
          1. Monetarism                
          2. Keynesian
          3. Real Business Cycle
          4. Austrian
          5. Hyman Minsky

          6. Big Cycles Over Last 500 Years

    F. Post WW 2  Cycle Analysis
       1. Competitive Adjustments

            2. Good Jobs Gone

            3. Severe Recessions

            4. Great Recession

            5. Great Recession

            6. Market Bubbles

            7. Big Cycles Over Last 100 Years


  G. Predicting Recessions

      1. Leading Indicators of Recession

Understanding Contrary Indicators  

       3. Recessions Using Excel Charts



Recoveries Vary



     Recoveries Can Be Slow and Weak

Historical Length of Recoveries - Click to enlarge

chart-book-the-legacy-of-the-great-recession source=CBPP


Tend to be Longer




Is Demography the Destiny of Growth?


Leading Indicators Links

Economic Forecast Outlook Barely Positive is extensive with many graphs 2/16

Leading Economic Indicators 2007/01/leading-economic

Index of Leading Indicators – Premature to Rule out Recession  5 19, 08

LEI and KRWI - It's Different This Time? P. Kasriel Northern Trust, 4/21/07


Leading indicators a short history of the numbers that rule our world 2/14 NYT

The Evolution Of Economic Indicators

II. Unemployment


           1. Structural and Frictional Cyclical

           2. Natural Cycles

           3. Generation Jobless 

               See Current Short and Longer-term Economic Questions

              For Visual Learners      

Does the unemployment rate tell
about the labor market

Economy Shut Down










  d. Okun's Law and the Great Recession 3/28/12
  e. Okun's Law, Labor Markets in Global Financial Crisis



See Post Covid Inflation


Unit IV. Review  Inflation caused by Demand Pull or
excess demand and Cost Push or low supply

   C. Misery Index and Long-Term Secular Trends

The Misery Index is the sum of the unemployment the inflation rates. 
                 It is a low 8.1% by historical standards with an average of 9.5% since 1948.










Recent Cycles


Short   See http://0Trends

  IV. History 8 videos


Problems With Economic Measurements Over Time video


CPI results in lower wage growth than PCE
Too many Use the CPI to show low wage growth
 to get elected, get funding for research

50 years ago i learn the CPI was used
to adjust government waged to cover inflation.
Change, took 10 years. Still waiting for SS to change.


Editor's Note: This paper by Bruce Sacerdote is worth noting:

D. Income inequality in the United States:
     it’s flatter than you may realize
 (Phillip W. Magness



Worker Compensation has Increased Even More

Productivity and Compensation Growing Together

Editor's Note: About 20 years ago I read where people concerned over the budget wanted to tie government salaries and SS to a more realistic measure of inflation and I was not surprised when government employees making the decision took about ten years to make the change.

SS still uses a  CPI Index to adjust benefits which gives recipients a bonus. "...many economists, ...conclude that the CPI overstates inflation." "... only some of the upward bias in the CPI have been eliminated."  



The Chained C-CPI-U is another step toward eliminating the substitution bias remaining in the CPI-U and CPI-W. Source As of 2005 the BLS reports  "The C-CPI-U to our knowledge currently is not used in any federal legislation as an adjustment mechanism."    


Price Changes 1988-2022



The Good Old Days Were Expensive








US Handles Biden's Inflation Well.



Inflation Often Determines Interest Rates


Recent inflation data provided
by the Department of Labor and an
Interactive graphic at the St. Louis Fed.

Interest Rates Since1800 What's Next?


Source nice graph useless analysis


Real Per Capita GDP
The Best Measure of Our Economic System

Editors Note:


Some Fear the Worst


Discretionary Spending is Down Because Voters
Want Economic Growth to go to SS and Medicare




People Will Always Think Prices Are Too High



    Long-Term Graphs





Stock Prices Continually Up


Reason Is Profits Are Continually Up


Interest Rates Were Constant Until Because We Print Money
 and Borrow to Buy Voters Instead of Party Bosses
A Flat World Stopped This and Profits Beat Wages


Bubbles Continue to Hurt






VII. Additional Readings       

A. Presidents and the Business Cycle
B. Only the Weak Survive import/export imbalances and the business cycle
           Nouriel Roubini, Project Syndicate (hat tip Mark Thoma) 10/15/10
C. How the Government Dealt With Past Recessions from the New York Times  
D. Lessons From the Forgotten Depression 1921: The Crash That Cured Itself
Business Cycles and Financial Crises is extensive
What Inflation Means To You: Inside The Consumer Price Index by Doug Short
G. Tax by inflation  by David John Marotta  3/24/14  of Seeking Alpha
H. Turning Which corner? 05/11/09 -Tim Duy's Fed Watch
I.  The Age of Balance Sheet Recessions: What Post-2008 World Learn from Japan
J. The Paradox of Thrift
K. What is-the real rate of interest telling us? Financial Times, Mart in Wolf's blog
Wrong: Nine Economic Policy Disasters and What We Can Learn From Them

chart of the day, jobs chart, september 2012

Last Chapter Next Chapter 
Chapter 9 Homework Questions Table of Contents



IV. History of the Business Cycle

A. Overview
     1 Most Severe US Recessions

     2. A Brief History of U S Banking will provide examples of what has
         caused the business cycle in the United States.

     3. The Financial Swindle-of-All-Time

     4. The first financial panic
         a. Causes of the 1837 Panic
         b. Panic of 1837
         c. Effects of Panic of 1837
   5. S&P earnings cycles
         a. Part 1: 1871 - 1900,  Source
         b. Part-2-1900- 1925
         c. List of U.S. Recessions
         d. Business Cycle data since 1854 from NBER

B. Top 10 Worldwide 20th Century Financial Crises 
    10. The Panic of 1907: The fourth so-called ”panic” in 34 years.
      9. The Mexican Peso Crisis 1994 aka “The December Mistake” Punta!
      8. Argentine economic crisis - 1999 If you have no money, is it a good idea
          to print  more?
      7. German hyperinflation - 1918-24 If you have to print a 1,000-billion
          Mark note, you have much inflation.
      6. Souk Al-Manakh - 1982 Try not to use post dated to buy stocks
      5. Black Monday - 1987 Can we call a 23% drop in a single day a black swan?
      4. Russian financial crisis - 1998 devaluation of the ruble and cancellation of
          debt was not good a market.
   3. East Asian financial crisis - 1997 aka the Asian Contagion
   2. Black Tuesday - 1929 — Really? One day, and not the entire Great Depression?
   1. 1973 Oil Crisis — Big energy price increases cause recessions

C. The Long Depression And Panic Of 1873

D. Great Depression by Robert J. Samuelson,
1. Amity Shales on the Great Depression 

The Great Depression, On EconLog and in his column at TCS
Daily, Arnold Kling also added insight to Shlaes's observations
2. Did France Cause the Great Depression
3. What Caused the Recession of 1937-38?
. The Battle of Smoot-Hawley The Economist 12/18/08
Understanding the Great Depression 9 min video

D. Post WW 2 Business Cycles
1. Post WW2 International Economic Competitive Adjustment
2. The Great Recession
3. Financial Crisis of 2007-10 Course
U.S. Normality Changes with 7 Competitive Adjustments 1945-2015

E. Videos
1. Black Monday - Part 1 - Nightly Business Report Oct.19, 1987 video
. Black Monday - Part 2 - Nightly Business Report Oct.19, 1987 video
Black Monday - Part 3 - Nightly Business Report Oct.19, 1987 video

F. Bubbles Credit And Their Consequences FED looks into predicting bubbles
G. Videos and graphs
1. American-Experience 29 Crash
2. South Sea Bubble of 1720 video
    3. Tulip mania: the classic story of a Dutch financial bubble  
4. Great Recession Slow Recovery Videos
Episode 1  2
H. Economic Cycles Before the Fed | Thomas E Woods, Jr. Austrian School




See Our Studies
The Financial Crisis

Most Severe US Recessions

2015 Political Economy Controversies

Action to Stop Recent Recessions, NYT

Bubbles Credit And Their Consequences FED

Democratic Capitalism vs. Capitalistic Democracy 

Editor's Note: The ten year recovery was the 1990s. The Vietnam expansion of the 1960s.
The longest was after WW2 and included the Korean War. Does anyone want to invade Clinton
or Trump to increase and extend current recovery by Syria plus bringing back the draft?

Economic Normality Changed Seven Times 1945-2015
         1. Rising Income
         2. Foreign Competition Began 1970's Wage Stagnation
         3. 1980's Bring Less Financial Regulation, Slow Wage Growth
         4. U.S. Financial Bailouts and Economic Recovery
         5. Poverty Stuck at 15% Since 1984
         6. Profit Growth Beats Wage Growth in New Century

         7. Wellbeing Continuing Growing

Macroeconomic disasters since 1870

Timeline Collection
   1. America's Great Depression
. Timeline of the Great Depression
   3. GB, France, US and Canada


Covid 19 Outliner



CV-19 hit Services and Investment Hard

Inflation Update 8/13/22

Over 12,000,000 Filed Over 2 Weeks

So We Spent $13 Dollars, Much was Saved.


2022 Seeing Slowdown



We Had a Great Moderation


Then a Slow Period

Output Gap = Actual GDP - Potential GDP
Continued Too Long

After CV Shutdowns
We Spent Much to Recover

After the Great Recession  Good Jobs Slow to Returned
 Fiscal Policy Larger fro Covi9-10



CV-19 Affect was Great-Counting Was Affected



Great Recession on top of Two Bush Wars
and Medicare Part D Caused Problems

1 of 10 scary-2017 Charts


Recovering from Great Recession Videos  

Video 1 establishes recovery actually has been weak, even compared to other
recoveries following deep recessions and financial crises.

Video 2 examines the possible causes of the weakness.

Video 3 concentrates on in my view, is the main cause—government economic policy.

Sources Econ 1 Blog and
First Principles: 5 Keys to Restoring  America Prosperity




Stocks Up Wages Down-What  It Mean/


For Visual Learners


Recessions Shorter, Expansion Longer




Overall employment is surging.







source has much more recent data



Stock Prices

ritholtz.com  longest-bull-markets-modern-era/



Government Support Is Everywhere




What is a Commodity Super Cycle?


Related Quick Studies
US Recessions Chronology

Most Severe US Recessions
The Great Recession 3 p
Great Recession: Historical Perspective
Post WW 2 US Economic Adjustments
Post WW2 International Economic Adjustment
Global Economic Growth and the Rise of Populism
Western Civilization Economic History
History of Stock Bubbles
4. Labor Force Participation Rate from The Big Picture blog.
          5. Noneconomic costs of unemployment include skill loss
          6. Discouraged workers leaving the workforce lowers
              unemployment. first 2 charts courtesy of Gluskin Shef
        7. Q&A: Unemployment Extension WSJ, 11/18/10
          8. Gallup has Higher Unemployment and Underemployment
              than the government. 04/01/11
          9. The Government Manipulates Unemployment Statistics  
              D. R. Amerman  3/12
        10. Videos-negative effects of minimum wage on employment
  C. Readings
Creating Jobs and Economic Security
        2. Economics of
Minimum Wage
        3. New Study Proves Seattle's High MW Punishes Poor
Sticky Wages Hold Back Job Growth WSJ, 11/12/10
        5. Exploring Different Unemploymnet Risks

6. Employment Multipliers-US

More Unemployment Data

Great Recession Was Not So Great

Unemployment Rate 



Great Recession: Deep, Quick and Slow Recovery
 Became the Longest in History

2007 Finally Recovered.

2019 Great Recession Chart Book

Bad But Getting Better




Unlike the1930's Depression, US Has A Federal Safety Net

Editors Note:

The calamity of the1930 resulted in federal programs   like food stamps, Medicaid, Medicare, Social Security and TANF to help the unemployed began arriving in the 1960's.











Unit III. Review Unemployment causes frication within employment process, structure problems, cycle effects

Will COVID-19 be a Big Time Turning Point?

"What is Unemployment







  • U-1 counts only those who have been unemployed for at least 15 weeks, which was traditionally a little longer than the average duration of an unemployment spell. This is considered to exclude short-term unemployment.
  • U-2 counts those who are unemployed because they have lost a job or completed a temporary job—in other words, workers in a precarious situation in the labor market, as they are more likely to find an unstable or unsatisfying job.
  • U-3 is the headline unemployment rate generally reported in the media: People who are able to work, ready to work, and have looked for work in the past four weeks. This corresponds the most closely to the definition of unemployment we started with.
  • U-4 is U-3 plus those who would like to work but have stopped looking—the so-called discouraged workers—because they believe there are no jobs for them.
  • U-5 is U-4 plus those who are marginally attached to the labor market who, for any reason, are no longer searching for work but may still work.
  • U-6 is U-5 plus those who are working part-time but would prefer to work full-time.
  • Raising the minimum wage and expanding the earned-income tax credit can reduce deaths of despair among the working class.

    National Bureau of Economic Research working paper.

    Chart 2: Unemployment Rate by Type of Previous Job


    Editors Note: The unemployment rate was high in 2011, 2012 and early 2013. But, calling it a Great Recession compared to the 1970's and early 1980's which also had inflation which really  hurt those on fixed incomes and those with non real estate assets is an exaggeration. Especially since the earlier period had two periods of high  unemployment and ten plus years of slow growth might. wikipedia be a bit of a stretch?  See 16) Stagflation and the Rise of Supply-Side Economics

    NYT 5/28/12

    North-Caroling crushes unemployed 12/17/13
    Arguing Over Extending Unemployment Benefits  12/14/13

    Europe's Furlough Unemployment System
    Will be Tested in Fall of 2020

    In US Worker Lose Jobs and then FEDS
     increase Safety Net

    US system hurts worker self-esteem but many feel it is more efficient

    Dollar Buys Less on World Markets




    Some Feel Inflation Overstated
    Because Quality Increases
     Difficult to Measure.

    Formed in 1913, the Federal Reserve took a while to learn its job.