Madrigal 1

Ivan Madrigal

Instructor Dr. Sherry Jensen

Economics 2020

1 May 2020

ePortfolio Assignment

The ePortfolio assignment is a capstone project for this class. I'll show what have

learned about Macroeconomics, creating and using graphs, and analyzing economic data. The

report is broken up into three sections(GDP, Unemployment, and Inflation) where I will

compare and contrast the most current economic data to the data from The Great Recession of

2007-09. The last page of the document is a reflection statement about what I thought before

this course and how my thinking has changed now that the course is over.

Below are the links to the source websites used for this project to observe data and to

create the graphs and maps. The third link is a public link where all the project’s graphs and

maps that I created can be found.

-The FRED(Federal Reserve of Economic Data): https://fred.stlouisfed.org/

- The GeoFRED(Geographic FRED): https://geofred.stlouisfed.org/

-The graphs and maps I created: https://research.stlouisfed.org/dashboard/52554

 Madrigal 2

GDP:
This first section focuses on the income component of the 2007-09 recession. I used the
FRED(Federal Reserve of Economic Data) to find relevant data. I started by going to the graph
‘Gross Domestic Product’, which shows a measure of the all U.S.’s final good and services
produced during different time periods. The most current point on the graph is Q1 2020 at
21,538, the units being measured in billions of dollars and the points having a quarterly
frequency. Switching the units to the ‘percent change from a year ago’, the current percent
change in nominal GDP is 2.08. This can be used a measure of nation’s growth year over year.
This measurement of nominal GDP may overstate real GDP because it might reflect an overall
rise in prices as opposed to the actual growth in the amount of goods and services produced.

Figure 1 - https://research.stlouisfed.org/dashboard/52554

The highest percentage change since the Great Recession(highlighted in grey in Figure 1
above) took place during Q2 2018 at 5.96. The annual percent change for nominal GDP at the
start of the recession was 3.11 for Q1 2008. The lowest annual ‘percent change from a year
ago’ in nominal GDP during the recession was -3.06 for Q2 2009. As can be seen in Figure 1, a
recovery to steady growth followed with the ‘percent change from year ago’ mostly staying
between 3 and 5. My final takeaway from this graph is that there is pattern of a rise and fall
that appears to be cyclical. I hypothesize that if there is growth every year and also fiscal and
monetary policies are put into place to avoid the downturns in growth, then that could be
leading to the more dramatic recessions when growth inevitably spikes and then has a sharp
downturn. As could have happened during the Great Recession that can be seen in Figure 1.
 Madrigal 3

Unemployment:
For this section, I used the GeoFRED to visualize the labor market component of the
Great Recession. Unemployment rate is the percentage of the currently unemployed from all
who are able and willing to work. I started by creating a map of the U.S. that shows the
unemployment rate of each state with some color grouping as can be seen in Figures 2 and 3.
The map can be viewed by the month, so the most recent month is 2020 March(Figure 3).
Looking at my home state, Utah, I see that the source is U.S. Bureau of Labor Statistics and the
last reported value was 3.8 for 2020 March. The states that currently have the highest rates of
unemployment are Nevada(the highest at 6.4), Pennsylvania(6.0), and West Virginal(6.1). I was
hoping to show all the states and their rates below, but I had to zoom in for the rates to show.

Figure 2 Figure 3

Figure 2 shows 2009 July which had the highest individual unemployment rate I found
from the 2007-09 recession. For that month, the states with the highest unemployment rate
started with the west coast states, then the Southeast up through the Midwest that had the
highest rates. All relatively high and densely populated states. Michigan had the high rate of
15.4. This could be somewhat explained by Michigan ranking last in the nation in growth(GDP)
against its’ population, real per capita gross domestic product. The lack of growth meant
Michigan became poorer relative to other states per capita. My observation from comparing
the two maps is that the Great Recession’s effects on employment appear to be much more
dramatic to the higher populated states that to the less densely populated states, like the Rocky
Mountains states. States like Wyoming and Montana had recession rates that were
comparably low to those of the Midwest and have only fallen about 2 points since. The
populated Midwest has had rates drop 5 to 11 points since 2009, they are now about equal
with Wyoming and Montana’s rates. The bigger the local economy and the more people there
are, the bigger the fall appears to be when recession hits.
 Madrigal 4

Inflation:
This section focuses on the price level component of the 2007-09 recession. I will use
FRED again to find data that pertains to inflation. Inflation can be calculated by finding the
percentage change in CPI between two relevant years. Looking first at the graph “Consumer
Price Index for All Urban Consumers”, I see that the agency that reports this data is U.S. Bureau
of Labor Statistics. The graph has values at a monthly frequency. The index measures price
changes(as a percent change) from a predetermined reference date, this graph has 1982-1984
as the base years. The most current value is for March 2020 at 257.95, the units being the
percentage change from the base years which would be 100. Switching the units on the graph
to ‘percent change from a year ago’, I can now see the percent change of any price level
measure as an estimate for inflation shown below as Figure 4.

Figure 4 - https://research.stlouisfed.org/dashboard/52554

The grayed-out bars in Figure 4 represent U.S. recessions. The current, March 2020,
inflation rate is 1.52. The highest inflation I see since the start of the Great Recession is 5.5
during July 2008 and the lowest is -1.96 during July 2009. Looking at the Figure 4 graph, we can
compare the Great Recession to past recessions. There obviously appears to be a reoccurring
pattern of a spike in inflation and then a sharp fall followed by a slower recovery. An examples
would be the spike in 1948 to around 10 and then a fall to -2.9(the lowest on the graph) by mid-
1949, another would be the spike to 14.6(the highest on the graph) in Mach 1980 and the
subsequent drop to 2.36 by mid-1983. Compared to that past, inflation has been less volatile in
recent decades staying typically between 1.5 and 3 with the Great Recession having the greater
outliers mentioned. Like the economic measures we studied above, inflation also appears to be
cyclical. The stability in inflation can likely be attributed to better policy and steady growth.
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Reflection:

The concepts I learned from this Macroeconomics class were all relatively new to me. I

had heard some of the terms, but I did not really know what they meant or how they affect me

in anyway. I had taken the Microeconomics class years ago and I liked learning about the

behavior or decision making on the individual. So, I did not know what to expect from this class,

was it going to be similar? In some ways it was, but we learned instead about the decision

making that takes place at a much large scale. I started to comprehend just how much influence

our elected leaders have on the economy and the world around me.

My favorite part of the course was using the graphs starting with Supply and Demand

and learning all the things that could shift a curve. Some of which appear to happen almost

naturally, but there is certainly also a lot the government can do to influence the different

aspects of the economy. That shows the debate there is on how much a government should be

involved since it all appears to be somewhat cyclical. There is not clear right answer, which I

would say is a part of the beauty in economics that there can be different philosophies and they

mix and match. I did come away believing there should be more progressive taxes and policies.

We see tax breaks and loopholes for the most wealthy and large corporations because

supposedly they will put the money back into the economy and it helps everyone. There is

some truth to that, but now knowing how much I am affected, I like it even less because we see

that our leaders of funded by some of those who benefit the most from regressive policies.