In this activity, students will look at look at data from past recessions, the conditions that led to the entry and exit of these recessions, and compare this with the current recession. Then students will track four economic indicators – industrial production, payroll employment, inflation-adjusted personal income, and volume of sales of the manufacturing and trade sectors – over several months to determine if and when the U.S. economy as bottomed out of the current recession. They will periodically theorize on the state of the U.S. economy and compare their ideas with that of economic experts. They will then compile their findings in a final report.
How do we know when we’ve hit the bottom? Is it when the stock market begins to move consistently into positive territory? Or, is it when we see increased growth in the gross domestic product (GDP) over a period of time? Even leading economists don’t exactly agree when an economy in recession has hit bottom. They look at many different economic conditions or “indicators” on how the economy is doing. One of the leading organizations that monitor the economy is the Conference Board (http://www.conference-board.org
) a non-profit organization that provides information on the global economy. Economists use this data to determine the state of the economy and whether it is advancing or receding.
The ten factors are:
-The average weekly hours worked by manufacturing workers
-The average number of initial applications for unemployment insurance
-The amount of manufacturers' new orders for consumer goods and materials
-The speed of delivery of new merchandise to vendors from suppliers
-The amount of new orders for capital goods unrelated to defense
-The amount of new building permits for residential buildings
-The S&P 500 stock index
-The inflation-adjusted monetary supply
-The spread between long and short interest rates
Activity A – Examining Past Recessions
In this activity, students will examine four historical charts that look at recessions from 1959 to 2008. They will look at four economic indicators that economists use to determine whether the country entering, in, or exiting a recession.
Divide the class into small groups of 2-3 students and distribute a copy of Student Handout: Four U.S. Economic Indicators
– 1959-2008 to each group. Have students examine the charts and discuss the following questions:
Reading the Charts
- Identify what each of the four charts measures in terms of the U.S. economy and describe how each of these categories is important to the U.S. economy.
- How many recessions are indicated on these charts?
- Approximately how long did the longest of these recessions last?
- How long has the current recession lasted so far?
- What does the overall direction of the line in each chart from 1959 to 2008 tell you about the overall health of the U.S. economy?
Discussion Questions (more research might be needed)
Activity B – Tracking the Current Recession
- What do you think is the current status of these four economic indicators in your state? Find out by checking your state’s departments of labor and economics.
- Explore the history of each of these recessions using information from the library or the Internet. You can find information on each of these recessions from the year the recession started. As an example, “The U.S. recession of 1973” or “the U.S. recession of 2001.” What factors got the country into the recession? Are any of these factors similar to the factors that created the most recent recession?
- What factors got the U.S. out of the past recessions? Could any of these factors help get the U.S. out of this recession?
- What advice do you have for President-elect Obama?
- What might be some of the positive aspects that could come about because of this recession?
In this activity, students will chart the progress of the U.S. economy studying the four economic indicators reviewed in Activity A. They will monitor these economic indicators over the next several months and possibly to the end of the school year, depending on how quickly the U.S. economy recovers.
- Have students stay in their same groups from Activity A or redistribute the groups into new small groups of 2-3 students. This activity can also be set up as an individual project.
- Distribute Student Handout: Tracking the Recession.
- Review the directions with students. Have students take note of when the reports come out (in most cases monthly).
- During the course of their research, periodically monitor students’ progress to make sure they are recording the data correctly.
- After a designated period of time, have students compile their data in large charts similar to the ones they reviewed in Activity A and summarize their findings on the state of the economy.
- Have students present their findings to the class.
Information on the four economic indicators
Employment- http://www.bls.gov/news.release/empsit.toc.htm and click Employment Situation Summary.
Personal Income- http://www.bea.gov/national/nipaweb/SelectTable.asp?Selected=N#S2 and scroll down to table 2.6 under Personal Income and Outlays
Industrial Production- http://www.federalreserve.gov/releases/g17/current/default_sup.htm and click Current Monthly Release, scroll down to Total Index on the Industrial Production and Capacity Utilization: Summary chart
Manufacturing and Trade Sales- http://www.census.gov/mtis/www/mtis.html and click the HTML link for the Current press release.
McRel compendium of K-12 Standards Addressed:|
Standard 5: Understands unemployment, income, and income distribution in a market economy
Benchmark 4: Understands that the unemployment rate (i.e., the percentage of the labor force considered to be unemployed rises during a recession, and the economy’s production is less than its potential level.
Standard 30: understands developments in foreign policy and domestic politics between the Nixon and Clinton presidencies.
Standard 31: understands economic, social, and cultural developments in the contemporary United States.