3/1/2016(C) 2003. Taggert J. Brooks. 3/1/2016(C) 2003. Taggert J. Brooks 2001 President George W....


2001 President George W. Bush takes office Band’s with #1 hits

Destiny’s Child Creed 2 Doors Down Shaggy Jay-Lo

http://www.angelfire.com/fl3/musicdays/at40.html Fashion trends from the Oscars

One-shouldered and strapless Red Major updos Curls and waves Trains on dresses Vintage looks Either nude lips or matte red Diamonds and pearls Hair accessories

http://www.angelfire.com/fl3/musicdays/at40.html


Levy


September 11, 2001


Economic events of 2001

High flying stock market Internet bubble Interest rate increases Oil on the Rise Y2K and investment overhang September 11th, 2001


Stock Market


Oil PricesWest Texas Intermediate Crude; Monthly NSA, Dollars Per Barrel

0

5

10

15

20

25

30

35

40

Jan-

90

Jul-9

0

Jan-

91

Jul-9

1

Jan-

92

Jul-9

2

Jan-

93

Jul-9

3

Jan-

94

Jul-9

4

Jan-

95

Jul-9

5

Jan-

96

Jul-9

6

Jan-

97

Jul-9

7

Jan-

98

Jul-9

8

Jan-

99

Jul-9

9

Jan-

00

Jul-0

0

Jan-

01

Jul-0

1

Jan-

02

Jul-0

2

Jan-

03


Annual Inflation for Past 12 Months

0

1

2

3

4

5

6Ja

n-90

Jan-

91

Jan-

92

Jan-

93

Jan-

94

Jan-

95

Jan-

96

Jan-

97

Jan-

98

Jan-

99

Jan-

00

Jan-

01

Jan-

02

Jan-

03

All Items

Core: Less Food andEnergy


Consumer Sentiment Falls

Consumer Sentiment; University of Michigan; 1966Q1=100; NSA

60

70

80

90

100

110

120

Jan-

99

Mar

-99

May

-99

Jul-9

9

Sep

-99

Nov

-99

Jan-

00

Mar

-00

May

-00

Jul-0

0

Sep

-00

Nov

-00

Jan-

01

Mar

-01

May

-01

Jul-0

1

Sep

-01

Nov

-01

Jan-

02

Mar

-02

May

-02

Jul-0

2

Sep

-02

Nov

-02

Jan-

03


Short Term Interest Rates

0

2

4

6

8

10

12Ja

n-90

Jan-

91

Jan-

92

Jan-

93

Jan-

94

Jan-

95

Jan-

96

Jan-

97

Jan-

98

Jan-

99

Jan-

00

Jan-

01

Jan-

02

Jan-

03

Federal funds (effective)Bank Prime Loan Rate


Employment

Total nonfarm: Total Employment (thousands), SA

127000

128000

129000

130000

131000

132000

133000Ja

n-99

Mar

-99

May

-99

Jul-9

9

Sep

-99

Nov

-99

Jan-

00

Mar

-00

May

-00

Jul-0

0

Sep

-00

Nov

-00

Jan-

01

Mar

-01

May

-01

Jul-0

1

Sep

-01

Nov

-01

Jan-

02

Mar

-02

May

-02

Jul-0

2

Sep

-02

Nov

-02

Jan-

03

Thou

sand

s, S

A


Gross domestic product

8,200.00

8,400.00

8,600.00

8,800.00

9,000.00

9,200.00

9,400.00

9,600.00

I II III IV I II III IV I II III IV I II III IV I II

1998 1998 1998 1998 1999 1999 1999 1999 2000 2000 2000 2000 2001 2001 2001 2001 2002 2002


Personal consumption expenditures

5,400.00

5,600.00

5,800.00

6,000.00

6,200.00

6,400.00

6,600.00


1998 1998 1998 1998 1999 1999 1999 1999 2000 2000 2000 2000 2001 2001 2001 2001 2002 2002


Gross private domestic investment

1,200.00

1,300.00

1,400.00

1,500.00

1,600.00

1,700.00

1,800.00

1,900.00


1998 1998 1998 1998 1999 1999 1999 1999 2000 2000 2000 2000 2001 2001 2001 2001 2002 2002


Equipment and software

600

650

700

750

800

850

900

950

1000

1050

1100


1998 1998 1998 1998 1999 1999 1999 1999 2000 2000 2000 2000 2001 2001 2001 2001 2002 2002


Help Wanted Advertising Index

Help Wanted Index

0

20

40

60

80

100

120

Jan-90

Jan-91

Jan-92

Jan-93

Jan-94

Jan-95

Jan-96

Jan-97

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03


GDP

Real GDP % Change at Annual Rates

-2

-1

0

1

2

3

4

5

6

7

8

Jan-99

Apr-99

Jul-99

Oct-99

Jan-00

Apr-00

Jul-00

Oct-00

Jan-01

Apr-01

Jul-01

Oct-01

Jan-02

Apr-02

Jul-02

Oct-02


If the Fed’s Uncertain...

Short Term Interest Rates

0

1

2

3

4

5

6

7

8

9

10

Jan-

99

Mar

-99

May

-99

Jul-9

9

Sep

-99

Nov

-99

Jan-

00

Mar

-00

May

-00

Jul-0

0

Sep

-00

Nov

-00

Jan-

01

Mar

-01

May

-01

Jul-0

1

Sep

-01

Nov

-01

Jan-

02

Mar

-02

May

-02

Jul-0

2

Sep

-02

Nov

-02

Jan-

03

Federal funds (effective)Bank Prime Loan Rate


Other Policy Response

Tax Cuts Rebates to people with dependents Tax breaks for corp. Investment incentives


How does this recession compare

Shorter? 8 months versus 10 for post WWII

Shallower


Real GDPReal GDP

0.92

0.94

0.96

0.98

1

1.02

1.04

1.06

1.08

2000:2 2000:3 2000:4 2001:1 2001:2 2001:3 2001:4 2002:1 2002:2 2002:3 2002:4 2003:1 2003:2

2001:4Average prev 6 recessions


Industrial Production

0.92

0.94

0.96

0.98

1

1.02

1.04

1.06

1.08

1.1

1.12

36647 36708 36770 36831 36892 36951 37012 37073 37135 37196 37257 37316 37377 37438 37500 37561 37622 37681 37742 37803

November 2001Average prev 6 recessions


Employment

Payroll Employment

0.92

0.94

0.96

0.98

1

1.02

1.04

36647 36708 36770 36831 36892 36951 37012 37073 37135 37196 37257 37316 37377 37438 37500 37561 37622 37681 37742 37803 37865

November 2001Average prev 6 recessions


Total nonfarm: Total Employment (thousands), SA

100000

105000

110000

115000

120000

125000

130000

135000

Jan-

90

Jan-

91

Jan-

92

Jan-

93

Jan-

94

Jan-

95

Jan-

96

Jan-

97

Jan-

98

Jan-

99

Jan-

00

Jan-

01

Jan-

02

Jan-

03

Thou

sand

s, S

A


How could policy respond differently?

Cut Interest Rates Quicker? Not raise interest by as much Shouldn’t have pricked the bubble

Tax incentives more directed? It was inevitable..


Data Sources

Bureau of Labor and Statistics Wisconsin Department of Workforce

Development Federal Reserve Bank of St. Louis Bureau of Economic Analysis Economagic.com MLS

3/1/2016(C) 2003. Taggert J. Brooks. 3/1/2016(C) 2003. Taggert J. Brooks 2001 President George W....

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