Evaluating the Overall Health of the Economy

  • In this project you will develop and demonstrate competence in identifying sources, collecting appropriate data, and analyzing it to evaluate the health of the overall economy.
  • By the due date, upload into Canvas this Word file with answers typed in red font along with a copy of the report used with pertinent info highlighted.
  • Always use the most recent report and seasonally adjusted data unless otherwise specified.
  • Make sure to state the correct denominations including all respective zeros in your answers (e.g., 125,000 thousand should be written 125,000,000).
  • Utilize only the data sources reviewed in class and in the Economic Indicator’s Text.
  • Any question ambiguity can be addressed by thoroughly explaining your answer.
  • It is expected that you work on this project regularly throughout the semester as each indicator is covered.
  • Grading is equally weighted based on letters, not numbers.
  • As necessary, questions may be added or modified throughout course, but such details will be announced in Canvas and only apply toward the final graded submission.  
  1. Using the most recent Consumer Confidence Index and Survey of Consumer Sentiment Reports:
  2. What are the expected inflation rates for the next year and next 5 years? 
  3. How many index points did each survey change in the most recent month and is this a positive or negative indicator of the economy?
  4. According to Michigan and Consumer Confidence Survey, each has two main indexes that are consolidated into the main index. Identify the most recent index number for the main and two sub-indexes for each.
  • Using the Schiller Home Price Index determine the following: 
  • Percent change in home values using the 20-city composite during the Great Recession from December 2007 to July 2009 (round to tenth of percent).
  • Do the same for the COVD period from March 2020 to the present.
  • Do the same as a and b above for the specific metro areas of San Diego (round to a tenth of percent).
  • Using the 20-city composite index, calculate the percent change from when the Great Recession ended (July 2009) to the present (round to tenth of percent). Do the same using the San Diego index.
  • A home in San Diego that was $300,000 in July 2009 would be how much in December 2020 and how much in the most recent month? Is this surprising? Would you consider housing a “stable” investment?
  • Using the Housing Starts and Building Permits Report, determine the following:
    • In the most recent month, how many new housing units were authorized for construction?
    • Is this higher or lower than the same month last year? By how much? What does this suggest about the future housing supply?
    • In the most recent month, how many new housing units were actually started (“broke ground”)
    • In the most recent month, how many new housing units were actually completed? What region had the highest percentage increase in completions?
    • If we are analyzing prices of housing a year or two from now which indicator (starts or completions) would be most helpful?
  • Using the Existing Home Sales Report, determine the following:
    • How many existing homes in the U.S. were sold in the most recent month?
    • How does that number compare with one year ago?
    • What is the total number of homes available for sale (“on the market”) in the most recent month and how does that compare with last year? How might this affect prices assuming demand is the same?
    • How long would it take for the current inventory on the market to be sold off?
    • What was the median existing home sale price in the most recent month? How does this compare to the Schiller Price Index? Why might they differ?

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