data analysis
Data Report 2
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A client has asked you to prepare a report documenting changes in inequality in the United
States since the 1970s. Your report should present data covering multiple variables that
demonstrate different ways to view the broad concept of inequality. It should also provide a
brief analysis of the patterns you observe. Your job is not to hypothesize causes of changes in
inequality, but rather to discuss the facts. Some ideas you may want to consider when
preparing the report:
1. How similar/different varying measures of inequality look over time
2. The difference between wealth inequality and income inequality
3. Before tax vs after tax measurements
4. Comparison of the US to other countries
5. Inequality between different genders, ethnicities, education levels, etc.
You do not need to answer all of the questions above and you are welcome to look at different
issues that you find interesting. Assume that the client is familiar with basic economic concepts
but is not an economist. This means part of your description should be focused on defining the
variables you chose and discussing precisely what they measure. When possible, discuss the
relevant tradeoffs between different measures (i.e. are there any shortcomings of the
measures?) and why you chose the ones that you did. Do your best to convey why the data
you are showing is important.
Requirements
1. Your report needs to look nice. Graphs should be easy to read, consistently themed, and
formatted cleanly. Text should be presented neatly and it should be clear to which graph
the text refers. Have some fun with it! Creativity is encouraged!
2. Your report must include at least 6 data series and at least 4 separate graphs (in other
words, you can put more than one series on a graph if it makes sense – for example income
shares for different groups). Do not take graphs from other sources. Always download the
data and create the graph yourself.
3. Part of your job is finding data sources. It should be pretty easy to find data (a google
search of “inequality downloadable data” brings up many options)
4. There is no formal requirement for length, but you do not need more than a few sentences
describing each graph (and a few on the comparison across graphs when that makes
sense to do). Bullets with incomplete sentences are ok if you prefer that format. The
important part is to make the reader understand precisely what is going on in each piece of
your data.
EXAMPLE1.pdf
Data Report #1
A History of the American Economy
Tiffany Diep
Professor Surro
ECON 165
4 February 2022
Introduction
This data report aims to provide statistical and economic insight towards the historical
development of the United States from 1870 to 2017.
● The country has seen immense growth since its establishment in the late 18th century, transforming from a series of British colonies into one of the most powerful independent
economies in the world.
● The American government and people have experienced periods of regulation, revolution, democratization, capitalism, industrialization, wars, recessions, and booms in
order to form itself into the global business powerhouse that it is today.
● To summarize it concisely, the years between 1870 and 2017 have been split into six distinct time periods that will allow for a closer look at key events in American history and
their effects on the data.
Multiple variables will be used to analyze these economic trends, including Real GDP per capita,
Consumer Prices, Government Expenditure, Government Revenue, Short-term Interest Rates, and
House Prices.
Source: Òscar Jordà, Moritz Schularick, and Alan M. Taylor. 2017. “Macrofinancial History and the
New Business Cycle Facts.” in NBER Macroeconomics Annual 2016, volume 31, edited by Martin
Eichenbaum and Jonathan A. Parker. Chicago: University of Chicago Press.
1
1870-1914: Railroads, Steel, Electricity, and Banking
The graph below depicts Real GDP per capita based on purchasing power parity rates (PPP). This
means that the yearly gross domestic product from the United States is converted into
international dollars and divided by the total population in the country. This variable is able to
measure the value of economic production per each individual American citizen.
An increase in Real GDP per capita can be explained by a strengthening economy that has higher
spending and aggregate demand for all goods/services, and a growing workforce which is able
to meet this demand by producing more. This trend can be seen consistently between 1870 and
1914, resulting in a net increase of Real GDP per capita by 2354 units.
A decrease in this variable can be alternatively caused by a reduction in aggregate demand that
leads to declines in revenue and employment. This can result from a lower level of productivity
and a growing population that reduces the amount of economic value attributed to each citizen
when calculating Real GDP per capita. Instances of these downturns can be seen in the graph
most notably in 1894, 1908, and 1914.
Overall, Real GDP per capita increased from 2445 to 4799 over the course of 44 years due to the
focus on improving industry and infrastructure during this period of time.
2
1914-1929: World War I and the Roaring Twenties
The Consumer Price Index (CPI) determines the weighted average of the price for a “basket of
goods.” This basket consists of basic consumer goods and services that can include food,
clothing, shelter, healthcare, education, transportation, and recreation. The change in prices can
be useful in measuring the cost of living over time.
CPI increases when the price of each good in the basket increases. The cost of these products
often rise due to inflation, and this is the case when looking at the trend between 1914 and 1920
where consumer prices doubled from 8 to 16 after World War I.
Similarly, the variable decreases whenever prices decrease from deflation. Additionally,
consumers may choose to find substitutes for their purchases in response to price changes, and
this can also lower the CPI because it alters the weight of each good in the basket. The chart
above shows a decrease from the spike in 1920 and prices begin to correct a year later, staying
constant at 14 throughout the rest of the Roaring Twenties.
This trend of inflation and deflation affecting the CPI is commonly seen during periods of war. The
inflation is caused by a shortage of resources or pent-up demand during the wartime effort, and
deflation begins to kick in after the government removes their control on the economy following
the aftermath.
3
1929-1945: The Great Depression and World War II
Government Expenditure includes the purchase of goods and services by federal, state, and local
governments for public consumption or investment. Government spending is funded mainly by
tax collection and income from public sectors like railroads.
An increase or decrease in Government Expenditure first takes into consideration the size of the
current budget deficit and the amount of national debt withstanding. If there is a large deficit and
a lot of debt, the government may be less likely to spend. However, spending can have the
potential to efficiently stimulate the economy in a way that leads to a boost in growth and GDP.
In the graph above, Government Expenditure during The Great Depression from 1929 to 1933
remained quite low. During World War II, there was a huge increase in government spending that
jumped from $9 billion in 1939 to $93 billion in 1945, making it the most expensive war in
American history. A majority of this spending went towards reforming factories and mass
producing resources and equipment for the wartime effort. As a result, many more jobs were
created and the unemployment rate declined significantly, marking this time as the beginning of
an economic boom.
4
1945-1973: Post-World War II Prosperity
Government Revenue is mainly collected through tariffs, consumption tax, and income tax. This
revenue is typically used to finance goods and services for American citizens and businesses.
The government’s main method of generating more revenue is by increasing tax rates or
reducing the amount of tax breaks. The trend in the graph shown above demonstrates consistent
upward movement, increasing from $45 billion in 1945 to $231 billion 1973. This can be explained
by the high tax rates after World War II that reached a high of 94% in certain years. During a time
of economic boom and prosperity, tax revenues often increase.
5
1973-2000: Inflation and Globalization
The Short-term Interest Rate is essentially the cost of borrowing money, and it is determined
through the market factors of supply and demand for monetary funds. Based on three-month
money market rates, it includes the average of daily rates shown as a percentage per year.
A number of factors can affect the determination of interest rates, including fiscal policy,
monetary policy, and inflation. Expansionary fiscal policy and contractionary monetary policy can
increase interest rates, while contractionary fiscal policy and expansionary monetary policy can
decrease interest rates. Higher interest rates are often helpful in reducing the amount of inflation
in the economy.
In the line chart above, the Short-term Interest Rate reached an extreme high of 16% in 1981,
compared to 9% at the beginning of the time period in 1973 and an even lower 6% at the end of
the time period in 2000. This may be due to the recessions and the resulting high levels of
inflation during the early 1980s. Strict government policies were most likely implemented in an
attempt to raise interest rates and bring inflation back down to a normal level.
6
2000-2017: The Housing Crisis and Aftermath
The House Price Index (HPI) aims to measure the change in price of single-family homes in the
United States. The prices are measured as a percentage change from the base year, which is
1990 in this case, and so the HPI at that time would be 100.
House prices function similarly to other goods and services in the free market, so when demand
goes up and supply goes down, houses get more expensive. Alternatively, when demand
decreases and supply increases, houses become more affordable.
In the case of the 2008 housing crisis, the HPI reached an additional 75% increase in house
prices after the initial 42% change in 2000. As demand remained high and the housing supply
stayed relatively stagnant in recent years, the house prices continued to steadily increase. In
2017, the HPI grew to its highest at 255, resulting in a net increase in house prices of 113%
compared to the beginning of the time period and it may be expected to continue growing.
7
Conclusion
Between the years of 1870 and 2017, the United States has gone through periods of both growth
and struggle. It is clear to see how the history of politics and economics are extremely intertwined
in a way that one thing affects the other.
● By looking at key events during the six time periods including the development of American capitalism, both World Wars, the Roaring Twenties, the Great Depression, and
the Housing Crisis of 2008, it is useful to associate these turning points in U.S. history
with relevant variables that can help explain why the economy responded the way that it
did.
The analysis of Real GDP per capita, Consumer Prices, Government Expenditure, Government
Revenue, Short-term Interest Rates, and House Prices throughout the data report help to
describe the functions of different economic measurements and how they can be used to provide
more background for historical trends in the U.S.
8
EXAMPLE2.pdf
Econ 165 Data Report 1
Table of Contents ◉ Introduction
◉ Period 1: 1870-1920
◉ Period 2: 1920-1970
◉ Period 3: 1970-2017
◉ Conclusion
Introduction
Introduction This report has been put together in order to provide a clear and concise overview of the history of the U.S. Economy. A total of 12 variables have been pulled from a data source, categorized, transformed, and separated into three time periods of approximately 50 years each. The variables have been organized under five of the most indicative categories of the U.S. economy: Nation, Government, Consumption, Banks, and Housing. There is also a short section dedicated to Financial Crises, which is only included to add to the picture of the U.S. economy. By organizing the raw data into these five categories, it is hoped that an understanding of the history of the U.S. economy will be more accessible.
It is important to note that many of the variables have been converted from nominal values into real values by dividing the original nominal data by the CPI, which has a baseline year of 1990. In addition, there are several instances in which variables were computed as a percentage of GDP by dividing the original nominal data by the nominal GDP.
Variables: Current Account, Imports, Exports, Government Revenue, Government Expenditure, Government Revenue & Expenditure as a Percent of GDP, Consumption Per Capita, GDP Per Capita, Consumption Per Capita as a Percent of GDP Per Capita, Bank Capital Ratio, Loan to Deposit Ratio, Home Prices, Mortgage Loans to Non-Financial Private Sector, and Financial Crises.
Time Periods: 1870-1920, 1920-1970, 1970-2017.
All variables will be graphed over time, and some will be graphed together in order to provide a holistic picture of a certain economic sector.
Period 1: 1870-1920
Nation
Current Account: There is no movement in the U.S. current account until right before 1915, when there is a sharp increase from $0 to about $0.35 billion. From 1915-1920 the current account is unsteady and seems to be declining at the end of this 50 year period. It is interesting to note that although there is movement in imports and exports (which are included in a country’s current account) before 1915, the current account itself remains at $0.
Imports: After some instability from 1870-1880, imports remain steady around $0.125 billion until 1905. After that, imports increase from $0.125 billion in 1905 to $0.3 billion in 1920. This is almost a 150% increase in only 15 years.
Exports: After an increase between 1870-1875, exports remain stagnant around $0.125 billion until 1900. After 1900, instability returns. Overall, exports increase substantially in the last 20 years of this period, starting at $0.125 billion in 1900 and ending at $0.5 billion in 1920. This is a 300% increase.
Government
Government Revenue: There is no movement in government revenues until the 5 years between 1895-1900. At this point, revenues increase from $0 to $0.15 billion and remain like this until the 5 years between 1915-1920. At this point, revenues increase quite substantially and at the end of this 50 year period, they are almost at $0.5 billion. Government Expenditure: Similarly to government revenue, expenditure does not move from $0 until the 5 years between 1895-1900. At this point, expenditures increase from $0 to $0.15 billion. After a dip back to $0 in 1902, expenditure begins increasing significantly from 1915-1920. During the last 5 years of this time period, expenditures increase by 200%. Government Revenue and Expenditure as a Percent of GDP: Both variables have very similar movement to government revenues and expenditures. It is only important to note that the most movement occurs from 1915-1920. Expenditures make up almost 23% of GDP in 1920, while revenues make up almost 8% of GDP.
Consumption
Consumption Per Capita: Despite some instability in consumption per capita during the first 50 years, there is an overall increase. In 1870, consumption per capita is at an index level of 8, indicating that it is 92% lower than the 2006 base year. This is reasonable given the large time difference. In 1920, consumption per capita is at an index level of 16, indicating that it is 84% lower than the 2006 base year. GDP Per Capita: GDP PC mirrors consumption PC pretty similarly for the first 50 years, with GDP PC consistently remaining below consumption PC. There is a steady increase in both variables from 1870-1920, with a slight decrease towards 1920. Consumption Per Capita as Percent of GDP Per Capita: Consumption PC remains, on average, unchanged. In this first 50 year period it makes up about 130% of GDP PC.
Banks
Bank Capital Ratio: The capital ratio of banks starts at about 32% in 1870. This is a high ratio and indicates that U.S. banks were at a position to handle losses well. By the 1920s, however, the ratio is right under 10%. This 20% decrease signals that U.S. banks were potentially taking on more risk and would not be positioned to handle any downturns as well as they would have been at the start of this period.
Bank Loan to Deposit Ratio: The loan to deposit ratio starts at 120%, indicating that for every bank deposit there were 1.2 bank loans. This is not great because it means that banks are loaning away more money than they actually have, stripping them of liquidity. Almost immediately, the ratio drops down to below 100%. By 1920, this ratio decreased to about 85%. This could mean that there were more bank deposits or less bank loans at the end of this period. Either way, the drop in percent is a good sign because it indicates higher bank liquidity.
Housing
Home Prices: There is no data available on home prices until 1890. The index level on home prices remains constant at about 0.42 until a sharp increase occurs in 1900. After this, the home price index is inconsistent, with sharp increases and decreases. In 1920, home prices are indexed at 0.44, which is only .02 higher than in 1890. There is very little growth in home prices during these 30 years.
Mortgage Loans to Non-Financial Private Sector: There is no data available for this variable until 1880. Overall, there seems to be a step pattern in this graph, as loans sharply increase and then remain stagnant for a few years repeatedly. From 1880-1890, mortgage loans were at about $0.125 billion. By the end of this period, mortgage loans were worth $0.5 billion. This is a 300% increase in mortgage loans to the non-financial private sector (which includes households) in the span of 40 years. Although there were some points of decrease, overall the mortgage loan market grew dramatically during this period. This can indicate a few things: more people were buying property, more people could not afford property, or banks were more lenient with lending.
Financial Crises
During the 50 year time period from 1870-1920, there were three financial crises. They occured in 1873, 1893, and 1907.
Period 2: 1920-1970
Nation
Current Account: Although the U.S. current account still averages at around $0-0.1 billion, there is more volatility during these middle 50 years. This makes sense because the economy is growing and progressing as time moves forward. Between 1945-1950 (post WWII), there is a sharp increase to $0.5 billion followed by a drop back down to $0. It remains interesting to note that although there is clear growth in imports and exports (which are included in a country’s current account), the current account itself grows very little. Imports: There is a clear upwards trend in imports during this period. Imports start at $0.3125 in 1920, and grow to over $1.8 billion by 1970. This increase of almost $1.5 billion indicates a growth in globalization and trade. Exports: Similarly to imports, there is a clear growth in exports. Exports start at $0.5 billion in 1920, and grow to over $1.9 billion by 1970. Again, this increase of approximately $1.4 billion not only indicates a growth in globalization, but it also indicates that the U.S. is keeping up with the expansion of the global economy. The sharpest growth in exports occurs from 1940-1945, the years of World War II, which indicates that the U.S. was exporting many war-related goods.
Government
Government Revenue: Although government revenues slightly increase from 1920-1940, the largest jump occurs between 1940-1945. In fact, revenues grow by over 370% during these five years. This growth in revenue can mostly be attributed to World War II and European expenditure on American war goods. After 1945, revenues suffered a slight decrease of 30%, followed by consistent growth of about $1 billion every five years. This is a sign of a progressing and strengthening economy. Government Expenditure: Expenditures follow a similar path as revenues during this middle 50 year period, only on a slightly larger scale. Again, the predominant growth of expenditures occurs from 1940-1945, presumably due to World War II. Expenditures grew by over 650% during the years of the war. After 1945, expenditure dropped by over 60%, followed by consistent growth. Government Revenue and Expenditure as a Percent of GDP: Both variables have very similar movement to government revenues and expenditures. Both revenues and expenditures make up a much higher percentage of GDP during the years of World War II. Although these percentages decrease post-war, they are still over 10% greater than pre-war.
Consumption
Consumption Per Capita: Unlike the previous period, consumption PC follows a steady path of increase from 1920-1970. There is no notable growth during the years of World War II. The only important thing to note is that consumption PC grew from an index level of 16 to an index level of 44. GDP Per Capita: GDP PC also follows a steady path of growth during this period. There is a notable increase in GDP PC from 1940-1945, the years of World War II. GDP PC grows from an index level of 21 to an index level of 34, and continues to grow postwar despite a slight dip. Consumption Per Capita as Percent of GDP Per Capita: Interestingly, consumption PC makes up less of GDP PC at the end of this period than it did at the end of the last period. During the years of World War II, consumption PC drops from 100% to about 67%. This drop may potentially be due to war-related factors making up a higher percentage of GDP PC.
Banks
Bank Capital Ratio: The capital ratio of banks starts at almost 8% in 1920. This ratio progressively decreases during this period, albeit on a small scale. The most noticeable dip occurs from 1940-1945. By 1970, the bank capital ratio is at just over 5%. This is quite low compared to the preceding 50 years, and may indicate that banks lost liquidity.
Bank Loan to Deposit Ratio: The loan to deposit ratio starts at about 85%, indicating that for every bank deposit there were 0.85 bank loans. This ratio drops significantly (almost 80%) from 1930-1945, which may be related to the Great Depression and World War II. The extremely low loan to deposit ratio by 1945 indicates that banks were much more liquid. After 1945, the ratio consistently increases, until it reaches 60% in 1970. Overall, the loan to deposit ratio was cut in half from 1870-1970.
Housing
Home Prices: The index level on home prices remains stable at about 0.6 until a sharp increase occurs postwar. This increase boosts home price index levels to about 0.9, which is extremely close to 1990 base year prices. It is interesting to note the dip in home prices during the early years of World War II and their quick recovery in the late years of World War II and postwar. Mortgage Loans to Non-Financial Private Sector: Mortgage loans experience a dramatic total increase during this 50 year time period. Post World War II, mortgage loans significantly increase and continue to do so until 1970. Mortgage loans grow from $0.5 billion to over $9 billion from 1920-1970, which is a 1,700% increase. This is huge and can partially be attributed to the increase in home prices that occurred postwar. There may also be a connection between Loan to Deposit ratios dropping in other loan categories (as discussed in the previous slide), allowing banks to allocate more money to mortgage loans.
Financial Crises
During the 50 year time period from 1920-1970, there was one financial crisis. This crisis occurred in 1930.
Period 3: 1970-2017
Nation
Current Account: There is a slight decrease in the U.S. current account from 1970-2017. Although the U.S. current account still averages at around $0 until 1992, it begins to drop below $0 after that. In 2017, the current account actually hovers around -$2.4 billion. It remains interesting to note that although there is clear growth in imports and exports (which are included in a country’s current account), the current actually decreases. Imports: There is a clear upwards trend in imports during this period. Imports start at $1.8 in 1970, and grow to over $16 billion by 2017. This increase of almost 790% indicates a very large growth in globalization and trade. Exports: Similarly to imports, there is a clear growth in exports. Exports start at $1.9 billion in 1970, and grow to almost $13 billion by 2017. Again, this increase of approximately 585% not only indicates a growth in globalization, but it also indicates that the U.S. is keeping up with the expansion of the global economy.
Government
Government Revenue: Government revenues have their highest and most consistent increase during this 50 year period. Besides for a large decrease which occurs in 2008, most likely due to the Great Recession, revenues are trending upwards. In 1970, revenues are at $6.2 billion and by 2017, they grow to $18.2 billion. Government Expenditure: Expenditures follow a similar path as revenues during this 50 year period, only on a slightly larger scale. Again, the growth is very consistent, despite the Great Recession. In fact, government expenditures actually increase by almost 25% from 2007-2009. This makes sense because of the government’s deficit spending during those few years. In 1970, revenues are at $6.3 billion and by 2017, they grow to $21.8 billion. Government Revenue and Expenditure as a Percent of GDP: Both variables almost follow an opposite path during this period. Similarly to what was stated above, although revenues make up less of GDP during the Great Recession, expenditures make up more of it.
Consumption
Consumption Per Capita: Consumption PC continues to follow a steady path of increase during this period. There is a very small dip in consumption PC during the Great Recession, but it is barely noticeable. It is important to note that consumption PC grew from an index level of 44 in 1970 to 111 in 2017, which is a growth of over 150%. This also means that by 2017, consumption PC was 11% than the base year of 2006. GDP Per Capita: GDP PC also continues to follow a steady path of growth during this period. It’s growth mimics consumption PC almost exactly, especially during the Great Recession. GDP PC grows from an index level of 49 to an index level of 110, which is a growth of almost 125%. This also means that by 2017, GDP PC was 10% than the base year of 2005. Consumption Per Capita as Percent of GDP Per Capita: Consumption PC continuously makes up more and more of GDP PC during this period. By 2017, consumption PC essentially makes up 100% of GDP PC.
Banks
Bank Capital Ratio: The capital ratio of banks starts at 5.27% in 1970. This ratio progressively increases during this period, albeit on small scale. By 2017, the bank capital ratio is at just over 9%. This is higher than the end of the preceding 50 years, and may indicate that banks gained liquidity.
Bank Loan to Deposit Ratio: The loan to deposit ratio starts at about 60%, indicating that for every bank deposit there were 0.6 bank loans. This ratio decreases significantly (almost 17%) from 2007-2010, and continues to decrease until 2013. It makes sense that this ratio would drop during the years of the Great Recession because of the housing market crash. It is also interesting to point out the increase in the loan to deposit ratio in the years preceding the Great Recession, otherwise known as the Housing Bubble. In 2017, the ratio is just over 71%. Overall, the loan to deposit ratio grew by about 18% from 1970-2017.
Housing
Home Prices: The index level on home prices remains stable until 2000, when it begins to increase quite dramatically. From 1995-2005, the home price index grows by 0.5. However, from 2006-2013, the price index decreases at the same rate that it increased. Again, this increase and decrease is most likely due to the housing bubble followed by the Great Recession. Overall, the home price index grows from 0.9 to 1.4 during this time period. Mortgage Loans to Non-Financial Private Sector: Mortgage loans experience a large increase during this 50 year time period. Despite a slight decrease during the Great Recession years, mortgage loans grow by 355% from 1970-2017. Although this growth is much smaller than the preceding 50 years, it is still large.
Financial Crises
During the 47 year time period from 1970-2017, there were two financial crises. They occured in 1984 and 2007.
Conclusion
Conclusion There has been a lot of information to cover in ensuring that a cohesive picture of U.S. economic history is presented. Although all five sectors have had continuous overall growth during the 147 years discussed, it is needless to say that the country suffered numerous periods of downturn. Most of these occurred during the same years as the financial crises, such as the Great Recession. Periods of growth can also be clearly attributed to historical events, such as World War II. Overall, it can be seen that in every sector, the U.S. economy pushes through struggles and crises in order to pursue continuous growth.
The first time period of 1870-1920 can be characterized by little to no growth, followed by sudden volatility. Although some variables experienced a lot of upturns and downturns in the last 20 years of this time period, because of the lack of movement in the first 30 years, it can still be interpreted as growth for the U.S. economy. Given the fact that the U.S. was still a young country in the 1800s, it is not surprising that there was not much movement in many variables, most notably government revenues and expenditures, until the 1900s.
The second time period of 1920-1970 can be characterized by consistent growth, despite high volatility. The Great Depression seemed to have the largest effect on Banks’ Loan to Deposit Ratio. However, despite this financial crisis, the U.S. economy increased greatly during these 50 years. Some of this can be attributed to World War II, which spurred a lot of international trade and purchases, as can be seen by the increase in exports from 1940-1945. Overall, the U.S. seems to be heading towards a bright economic future at the end of these 50 years.
The third time period of 1970-2017 can be characterized by a continuation of growth, albeit at a less dramatic rate. Although almost all variables more or less increase during these 50 years, the percentage of growth is smaller than the preceding 50 years. There are some clear downturns in home prices, government revenues, and loan to deposit ratios during the years of the Great Recession, which makes sense. In addition, it is interesting to see the sharp increase in government expenditure during the Great Recession. Overall, these last 50 years indicate steady economic growth.
It is promising to see that despite numerous financial crises, recessions, depressions, and wars, the U.S. economy has the ability to push through them. These 147 years included a lot of challenging times for the U.S., but the strength and growth of the U.S. economy is undeniable.
EXAMPLE3.pdf
Econ 165: Data Report 1
Robert Priolo
February 4, 2022
1 Overview
The following data report will review the economic history of the United States over the past 147 years. This report will examine historical trends of economic data in America, including population, GDP, CPI and inflation data, long-term and short-term interest rates, and finally, mortgage spending. Key statistical data is provided for each metric showing their means throughout the history of the United States, along with percentage changes from year to year. This report will also examine the correlations between GDP, CPI, interest rates, and the housing market from the data set provided, and provide insight on how interest rates are manipulated by The Federal Reserve to achieve the goals of the country.
2 Population
Since 1880, The United States has grown relatively faster than most other countries, as illustrated in Figure 1(a). The U.S. population growth has outpaced other countries to the point of making up almost 50% of the population of the top 10 countries within the data set, which is shown in Figure 1(b). However, although the United States has seen tremendous growth, the data will show that its success is not without ups and downs. Over the past 147 years, the United States has experienced several booms and busts, ranging from cyclical high interest rate and inflation environments, to recessions and depressions with low interest rates, which are designed to spur economic activity.
(a) Population Growth (b) Population Breakdown
Figure 1: USA Population Data: Top 10 Countries
1
3 GDP
Figure 2: Real GDP: 1870-2017
Much like the population in the United States, Real GDP in the U.S. has steadily grown. In Figure 2, we can see that real GDP year over year ranges between -10% and +10%. The two greatest dips are around 1930 and 1946, which coincide with America’s Great Depression and exit from from World War II. Inter- estingly, however, is the lower volatility of real GDP since 1950.
In examining the data as of 1950, we can see the range of volatility is much less. Using Figure 3 to highlight the data since 1950, we can see that the average GDP growth is approximately 2%, with a low of -2% and a high of 6%. GDP growth was at peak values around 1950 and 1985, and GDP growth was at the lowest values around 1982 and 2008. By simply examining the real GDP graph, it appears that when GDP is at its lowest, it is directly fol- lowed by GDP reaching a peak. It appears that the American economy consistently bounces back and forth between the two extremes. Theoretically, one can deduce that when economic activity is at its
lowest, the U.S. takes fiscal action to stimulate the economy and increase production, and when economic activity is too high, the U.S. reduces fiscal actions to help decelerate the economy.
(a) Real GDP Chart: 1950-2017 (b) Real GDP Range: 1950-2017
Figure 3: Real GDP: 1950-2017
2
4 CPI
Figure 4: CPI Data: 1870-2017
The Consumer Price Index (CPI) is a weighted av- erage basket of consumer goods and services. In reviewing the history of CPI in America, it does not show the same chart patterns as GDP or population. Instead of a consistent uptrend since 1870, Figure 4 depicts that CPI has only begun to increase around 1975. Regardless, CPI has been volatile through- out American history, with high inflation around the years of 1920, 1950, and 1980. Interestingly enough, there has not been any deflation in American his- tory, except for a small time period between 1920 through 1930. Overall, long run inflation appears to average around 2%, and ranges between -5% with outlier peaks at 10%, with the exception of over 15% during the 1920s.
It is important to note that the joint re- lationship between CPI and GDP shows a positive regression, indicating that higher GDP growth rates coincides with higher rates of inflation. The equilib- rium between CPI and GDP remains around the 2% mark. Figure 5 represents this data analysis using a joint graph. The joint graph shows little to no plots in quadrant 2, which is when GDP is high and CPI is low. Furthermore, there are no plots in quadrant 4, which is when GDP is low and CPI is high.
Figure 5: CPI Vs GDP
The cross between GDP and CPI tells an interesting story about the history of economics in the United States. The data shows that when the country is in a recession, both GDP output and inflation are low. In times when economic activity is high, GDP is also high, but at the expense of inflation. Due to the nature of GDP and CPI, it is important that the government balances its equi- librium to avoid hyperinflation or lack of economic growth.
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5 Interest Rates
Figure 6: Interest Rates from 1880-2017
In order to better understand the relationship between GDP and CPI, we need to examine interest rates over the past 147 years and their affect on GDP and CPI. Interest rates are classified as short-term or long-term interest rates, where short-term is generally less than one year, and long-term is up to 30 years. Both long and short-term rates appear to move in the same direction as each other; however, short-term rates have more pronounced changes, while long-term rates appear smooth over time. In Figure 6, the graph shows that interest rates reached all time historical highs around 1980, for both short-term and long-term interest rates. Another observation is that interest rates are now at historical lows and at levels that have not been seen in the United States since the 1940s.
Figure 7: Long vs Short-Term Rates
In reviewing the joint graph in Figure 7, it is clear that long-term and short-term interest rates tend to positively move together. Long-term interest rates have averaged just shy of 4% APR, and range between near 0% up to 8%. Long-term outlier rates reach up to 14%. Short-term interest rates also average just shy of 4% APR, but have a bigger range between near 0% up to 11% APR. Short-term outlier rates have exceeded 16% in a rare occasion around 1980.
Upon analyzing CPI changes vs GDP vs Long-Term Rates, we are able to see a few key points in Figure 8a. CPI was near the highs around 1920, 1950, and 1980. We can also see that the long-term rates were also near the highs during 1920 and 1980, but not during 1950. The main distinction is that during that 1950 time period, GDP dropped to all- time lows. This indicates that high interest rates are used to stop inflation when CPI is near the highs, while interest rates are also used to boost GDP and aggregate spending.
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GDP during the time period after 1950 has less volatility, making it harder to see any correlation between interest rates, CPI, and GDP. Figure 8b shows a closer view of the time period between 1950 and 2017, making peaks and valleys easier to spot. The data that stands out is between 1975 and 1980. It is clear that exceedingly high inflation was matched with aggressive interest rates, from which there was a negative impact on GDP output. A few years after reaching peak inflation and interest rates, GDP output fell to its lowest levels around 1950, after World War II ended. Interest rates soon began to taper, allowing GDP growth to return to normal by the mid-1980s.
(a) CPI vs GDP vs Long-Term Rates: Since 1870 (b) CPI vs GDP vs Long-Term Rates: Since 1950
Figure 8: Comparison of CPI vs GDP vs Long-Term Rates
Figure 9: Inflation Vs Long-Term Rates
The relationship between CPI inflation and interest rates confirms the hypothesis that higher inflation is often equally matched with higher interest rates. The joint graph in Figure 9 shows this relationship in more detail, where the mean CPI in- flation of 3% is matched with a mean long-term in- terest rate of around 5%. From this analysis of data, we can draw a new hypothesis that low interest rates increase consumer spending, which in turn increases GDP output and at the same time causes inflation.
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6 Mortgage Spending
Figure 10: Rates, Mortgages, and GDP: 1900-2017
Real estate mortgages are among the largest con- tributors to GDP in the United States from which we can use to analyze the effects of interest rate changes on GDP. In Figure 10, the data points of interest are 1930, 1950, 1980, and 2008. Around the time of the Great Depression in 1930, it is clear that both GDP and mortgage spending are at extreme lows. However, there is no change in the long-term interest rates. It can be attributed that during this time in American history, the Federal Reserve did not use its fiscal policy as needed, or was unaware of the effects of manipulating interest rates in order to offset GDP. Therefore, this time period is not as relevant as others. It is not until about 1940 that in- terest rates reach such a low point that GDP begins to rise and mortgage spending increases.
During the time period around 1950, af- ter the United States exited World War II, GDP plummets as war production decreases; however, a low interest rate environment and veterans return- ing home ramp up mortgage spending to record
highs a few years later. What happens during 1980 is of most significance in the entire data set, and it is a point in history where we can clearly see the effects of high interest rates on both mortgage spending and GDP. In 1980, interest rates are at peak highs, mortgage spending is the lowest in 40 years, and GDP is at a low. Following this time period, as interest rate begin to recede, mortgage spending trends upwards while GDP remains steady until the 2008 housing market crash. In 2008, mortgage spending and GDP are at its lows; however, this time the United States lowers interest rates to the lowest levels since 1940. Shortly thereafter, mortgage spending begins to rise again and GDP normalizes.
7 Conclusion
In conclusion, we have examined several indicators that represent America’s economic history over the past 147 years. The U.S. has grown faster than any other nation, and America’s growth is not without cyclical ups and downs in GDP, CPI, interest rates, and mortgage spending. We have discovered that the relationship between GDP and CPI coincide with each other, and that it is vitally important for the government to keep its equilibrium within acceptable ranges. Finally, the government uses monetary tools, such as controlling interest rates, to help increase productivity when GDP is low and end inflation when it reaches extremes. Understanding these economic patterns can help people make more informed business decisions, and be prepared for the extreme peaks and valleys in the economy.
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EXAMPLE4.pdf
THE US ECONOMY DATA REPORT
M A R Y A N N A N
February 4th, 2022
1870 – 2017
Introduction
Trade
Consumption
GDP
Government
Mary An Nan | The US Economy (1870-2017)
Table of Contents
0 1 .
0 4 .
0 3 .
0 2 .
0 5 .
House Prices
Imports & Exports
Revenue & Expenditure
0 6 . Conclusion
The US economy can easily be considered as one of the largest economies amongst its global competitors. As an institution that has experienced various challenges domestically, its trajectory of change throughout history is dynamic and progressive. The US presents itself as a highly developed country with an ever growing capacity for technological advancements. These developments contribute to the country’s growing global output as policies adjust to accommodate for the reallocation of resources and money. This report will be covering the development of the US economy through the years of 1870 – 2017. Specifically, GDP will be used as a gauge for economic growth. To make the data easier to digest, most figures have been segmented into three 50 year time intervals (1870 – 1920, 1921 – 1970, 1971 – 2017). The focus will be on 6 indicator variables that have substantial contribution to the rise and fall of GDP throughout history. These variables can be grouped into the categories of consumption, trade, and government. The report will begin with exploring the growth of the US economy through measures of consumption and fluctuating house prices. In the section of trade, annual imports and exports are documented to illustrate the trend of the market in terms of international activity. Finally, the report will take a look at how government revenue and expenditure fluctuated alongside the changing circumstances relative to the given time period.
Introduction
Mary An Nan | The US Economy (1870-2017)
The Gross Domestic Product (GDP) is an essential tool in indicating the health of an economy. The graphs below gives the nominal GDP as a general gauge on the wellbeing of the economy. The factors contributing these periods of growth and recession will be delved into in the following pages of the report.
GDP
Although all three graphs indicate an exponential growth pattern, it is clear that the earlier periods exhibited a much more rapid incline compared to its latter counterparts.
From 1870 – 1920 there was a steady growth in GDP up until the early 1900s. In 1914, a sharp incline propelled GDP growth dramatically with a change of approximately 8.7 GDP units per year. The GDP growth softened during the beginning of next period but continued with its steady exponential upwards trend. Compared with last period, the increase this period was less sporadic, with no sharp dips or inclines. Nearing the most recent half century, the graph almost resembles that of a linear relationship. Growth in output is no longer as accelerated but instead shows more of a steady development as we near modern day.
As a whole, the GDP over the 150 years has jumped from a respectable 8 to a much greater 19,519, an increase of 2439%.
US Nominal GDP (1870 – 1920)
US Nominal GDP (1932 – 1970)
US Nominal GDP (1971 – 2017)
Mary An Nan | The US Economy (1870-2017)
Consumption Making up 70% of GDP, consumption is used as a measure of productivity,
with increasing numbers contributing to economic growth. The below takes a look at real GDP & consumption per capita collectively, adjusting for inflation.
US Real GDP & Consumption per capita (1870 – 2017)
Taking a quick glance at how real GDP per capita compares with consumption per capita, exponential growth is present throughout the 150 year history. Consumption followed the pattern displayed alongside real GDP, particularly with the dip that occurs in the period from 1930 – 1940. As real GDP per capita continues to climb, a noticeable increase in the gap between real consumption develops as we get closer to modern day. This pattern indicates the growing impact that other factors (investment, imports, exports, government spending etc.) are having on the escalating GDP.
Mary An Nan | The US Economy (1870-2017)
*Data begins in 1890 due to lack of records on housing prices in
the years prior
Housing Prices2
It is notable that nominal GDP and housing prices move in similar patterns, generally exhibiting an exponential growth. From the period of 1870 – 1920, an upward trend is noted especially in 1914, the same year a sharp incline was recognized in nominal GDP. One point of deviation occurred during the years of 1941 – 1947 in which housing prices presented an increase of 128% while GDP only grew by 93%, indicating minimal contribution of the strengthening housing market towards GDP growth. Growth of housing prices was again close to linear during the latter third of the data collected, with the highest price value of 228 in 2006 before falling back down in the years after and rising back up in 2012. Overall, despite some minor dips, housing prices increased by 8400% in the 127 year timeline.
US House Price & GDP (1890 – 1920)*
US House Price & GDP (1921-1970) US House Price & GDP (1971-2017)
The housing market represents approximately 15% to 18% of overall GDP (in the consumption & investment category) making it one of the most significant indicators of the overall health of the US economy. Therefore, a strong or weak housing market can have an impactful influence on the trajectory the US economy will be heading towards. Rising housing prices indicate potential for higher consumer spending, leading to a boost in GDP, with the same logic vise versa.
Mary An Nan | The US Economy (1870-2017)
Looking at the imports and exports of the US economy gives a glimpse at the trade market with international entities. A healthy economy displays robust growth in both imports and exports. An influx of imports in relation to a stagnating rate of export may create a trade deficit that could harm the economy and lead to decreases in GDP levels. Trade balance is essential for determining economic growth and whether the country is in a trade surplus or deficit.
Trade Import & Exports
Exports and imports remained relatively the same during the remaining years of the 19th century, indicating a lack of trade with other countries. Production and distribution was largely conducted domestically, with little interaction internationally. The beginning of the rise in trade can be pinpointed to 1915, in which the trade balance shows an average surplus of 3.6 for the next 5 years.
However, this small increase in growth did not last long and trade levels went back down for another two decades after. Trade didn’t pick up again until 1943 in which it began to grow exponentially with the highest peak in trade surplus of 10 in 1943 and 1944.
The third period of the US trade market was marked by a prolonged period of trade deficits. By the end of 2017, net exports had fallen by 14,575% in a half century. The US trade market thus has contributed to the negative impact in GDP values during the past 50 years.
US Trade (1870 – 1920)
US Trade (1921 – 1970)
US Trade (1971 – 2017)
Mary An Nan | The US Economy (1870-2017)
The government plays a major role in promoting economic growth through increased expenditures. While Increased spending is usually a way to stimulate the economy during periods of recessions, increasing government revenue through taxes can control inflation during economic booms. By comparing the rate of spending and revenue to other factors such as GDP, it can be seen if these spending measures are positively boosting economic activity.
Government
Government involvement remained minimal in the beginning years from 1870 to early 1900s. However, an increase in government spending occurred in 1918 where values experienced a 550% increase from the year prior. During this period, revenue stayed relatively the same. The sudden spike didn’t last, and levels returned back to their initial level just 2 years after.
Gov. Revenue & Expenditure (1870-1920)
Gov. Revenue & Expenditure (1921-1970)
Gov. Revenue & Expenditure (1971-2017)
The next round of growth occurred after 1941, where both government revenue and expenditure continued to grow exponentially. Major rises and dips can be identified from the years of 1941-1955, indicating substantial government intervention in stimulating the economy and increases in tax and non-tax revenues. Specifically, from 1941 -1945, a 564% increase was exhibited in spending alongside a 400% increase in revenue.
In the final third of data, government spending and revenue continued with a constant upward trend, evading drastic dips and spikes. The gap between government expenditure and revenue gradually increased as time passed on, ending up with a difference of 666 in 2017. It can be noted that there was no government surplus exhibited during this entire period in history.
Revenue & Expenditure
Mary An Nan | The US Economy (1870-2017)
Conclusion
By observing the patterns of variables that contribute to the GDP, a better understanding of the trends in the US economy can be achieved.
Common trends can be concluded from the given data. The beginning years of 1870 – 1920 usually showed minimal involvement of outside factors such as government and international trade. Stimulation and progressions didn't occur until the final few years of this period. The majority of sporadic changes occurring during the middle period of 1921- 1970 where variables in consumption, trade, and government exhibited major growth patterns. These trends generally continued on at a steady exponential rate for the last half century (1971 – 2017) of documented data, reaching levels far from their initial numbers in 1870.
All the indicator variables noted had varying contribution to the growing US GDP. By breaking the components down and taking a closer look at each of their movements, alongside periods of sudden dips and surges, a clearer picture and better explanation of the patterns of US growth and development can be appreciated.
Mary An Nan | The US Economy (1870-2017)
Data Report 1 Assignment.pdf
Data Report 1
A client has asked you to prepare them a report on the history of economic statistics in the United States. The client is an intelligent businessman, but only knows the basics of economics. Your job is to develop a report that provides them an overview of the key trends and patterns in US economic history in a well-organized, visually appealing report including graphs of the most important economic variables.
Requirements
1. Your report should start with a title page and a brief introduction giving a brief overview of what the report is about and what it will include. It should end with a brief conclusion summarizing the key points.
2. The body of the report should include graphs and descriptions that help the reader understand how the US economy has developed over time. It is up to you how to exactly organize the report. You may want to separate the data into different time periods to help break it up or group sets of variables and describe them all together. Your report should read as a cohesive story of the US economy.
3. I have provided a data set for you to use, but you should not use every variable. It is up to you to decide which variables are important to include. You must discuss a minimum of 6 distinct variables in your report, but can include more as you feel necessary to tell your story. Including more variables will not automatically earn you a higher grade. Only include what is useful in understanding the history of the US economy.
4. You are not expected to understand or explain why the data moves, but rather just to explain how it moves and changes over time. You do not need to do any research or use any resource beyond the included dataset.
5. There is no formal requirement for the length of the report, but you will not get more credit for simply writing more. A concise, insightful report is much preferred to a lengthy, bloated one.
6. Your report needs to look nice. Graphs should be easy to read, consistently themed, and cleanly formatted. You should not use the default graph style of whatever program you make them in. Text should be presented neatly and it should be clear to which graph the text refers. It should be easy to figure out the main ideas the report is trying to convey. Moderate use of color is a good idea. Have some fun with it! Creativity is encouraged!
7. You may use whatever program you want to put the report together. Excel, Google Sheets, and Numbers will all work for graphs (you may also use a statistical program like R, Stata, Python if you prefer). Word, Pages, Google Docs, Powerpoint, or Keynote will work to put everything together into a nice report. If you have another program you want to use it’s probably fine. In the end you should submit your report as a single PDF.
8. The assignment is worth 120 points and is due Friday 2/4 on Bruin Learn by 11:59 pm
Grading:
You will receive 75% of the grade (90 points) for completing the basic requirements as described above. I will ask my grader to give you a score on the remaining 30 points based on the following questions:
1. Is the report clean and professional looking? 2. Do the different parts of the report do a good job organizing the data into a coherent story
of the US economy? Does it appear that some thought went into which variables to include?
3. Are the graphs easy to read and is it clear what data they are trying to show? Do the graphs always display the data in an appropriate form?
4. Does the text do a good job concisely pointing out interesting trends and/or explaining why the variable was included in the report?
5. Most importantly – if you were the supervisor in charge of presenting the report to the client, would you feel comfortable doing so?
Based on the answers to these questions, you will be assigned a score according to the following scale:
Poor (B-): 0-6 points Needs Significant Improvement (B): 7-10 points Needs Minor Improvement (B+): 11-16 points Meets Expectations (A-): 17-20 points Exceeds Expectations (A): 21-25 points Outstanding (A+): 26-30 points
