Analysis of a Business Cycle

The US economy, along with the world economy has been going through its worst recession since the Great Depression. The recession started in December 2007 and is in its 21st month now. The second quarter GDP numbers that were released earlier in August seemed to suggest some hope of a stabilization and eventual end of the recession. The following table presents some of the salient features of the economy during the last six months:

|Month |Unemployment Rate |Consumer Price Index |Inflation Rate |

|January |7.6 |211.143 |0.3 |

|February |8.1 |212.193 |0.4 |

|March |8.5 |212.709 |-0.1 |

|April |8.9 |213.240 |0.0 |

|May |9.4 |213.856 |0.1 |

|June |9.5 |215.693 |0.7 |

Table 1: Select US Economic Indicators, 2009

Source: BEA and BLS. See attached data sheet for more details.

As can be seen from the table the unemployment rate has been consistently rising during the period, and it has seen the total number of unemployed rise by about 3 million people! That is a substantial number by any standards. This has had an impact on businesses of all types, particularly financial services and retail. The period has seen some big firms go out of business. The GDP...