Station 2:

The Great Depression

The Great Depression was a severe worldwide economic
depression in the decade preceding World War II. The
timing of the Great Depression varied across nations, but
in most countries it started in 1930 and lasted until the late
1930s or middle 1940s. It was the longest, deepest, and
most widespread depression of the 20th century.
In the 21st century, the Great Depression is commonly
used as an example of how far the world's economy can
decline. The depression originated in the U.S., after the
fall in stock prices that began around September 4, 1929,
and became worldwide news with
the stock market crash of October 29,
1929 (known as Black Tuesday).
The Great Depression had
devastating effects in
countries rich and poor. Personal
income, tax revenue, profits and
prices dropped, while international trade plunged by more
than 50%. Unemployment in the U.S. rose to 25%, and in
some countries rose as high as 33%.
Cities all around the world were hit hard, especially those
dependent on heavy industry. Construction was virtually
halted in many countries. Farming and rural areas suffered
as crop prices fell by approximately 60%.
Some economies started to recover by the mid-1930s. In
many countries, the negative effects of the Great
Depression lasted until after the end of World War II.


United States Britain France Germany
Industrial
production
46% 23% 24% 41%
Foreign Trade -70% -60% -54% -61%
Unemployment +607% +129% +214% +232%

An economic depression is an example of what
phase of the business cycle?
Why is it so hard for people to find work during a
depression? Use examples from this station.




Station 3: Post War Peak










Many Americans feared that the end of World War II and the subsequent
drop in military spending might bring back the hard times of the Great
Depression. But instead, pent-up consumer demand fueled exceptionally
strong economic growth in the post war period. The automobile industry
successfully converted back to producing cars, and new industries such as
aviation and electronics grew by leaps and bounds. A housing boom,
stimulated in part by easily affordable mortgages for returning members of
the military, added to the expansion. The nation's gross national product
rose from about $200,000 million in 1940 to $300,000 million in 1950 and to
more than $500,000 million in 1960. At the same time, the jump in
postwar births, known as the "baby boom," increased the number of
consumers. More and more Americans joined the middle class.
What phase of the business cycle is this period
referring to?

Why would Americans fear an economic recession
after a period of war?

How do you think a period of economic growth
corresponds to a Baby Boom?

Would you expect the economy to perform this way?
Why or why not?

Station 5: Buffalo on the Rise (2011)

















For residents of Buffalo, N.Y., there are few obvious signs that the
local economy has been improving. The Queen Citys
manufacturing base has been gutted and population growth has
stagnated. Yet Buffalo is better off than it seems. Along with 20
other metros, it has rebounded to near-prerecession levels in
terms of jobs, unemployment, economic output, and house prices.
According to a new report from the Brookings Institution, Buffalo
and such rust belt metros as Rochester, N.Y., and Pittsburgh
as well as much-discussed growth zones like Washington have
outperformed many of the nations leading economic areas since
the recession began. Behind Buffalos performance is growth in
such areas as health-care and social-assistance jobs, which have
grown to about 73,400 in May 2011, from an average of 69,600 in
2007, according to U.S. Bureau of Labor Statistics data. In the
same period, employment in leisure and hospitality jumped to
55,200, from 49,100. The Buffalo areas housing prices did not
spike during the real estate bubble, so home prices have been
stable, compared with those in many parts of the country.
As Howard Wial, a fellow for the Metropolitan Policy Program at
Brookings, points out, many metro areas in the report were not
particularly strong before the downturn and havent necessarily
enjoyed quick recoveries.

What helped Buffalos economy grow after the
recession of the late 2000s?




How can you tell Buffalo is continuing to grow
now?

Station 1:
Germans loose the First World War-
By 1914 Germany had become Europes most
powerful economic and military power, and was
second only to the United States in the world. Four
long, terrible years of warfare meant that, by 1918,
Germanys economy was in ruins.


The effects of defeat
Warfare meant that Germany could not import or
export industrial goods and severely limited trade.
Resources and food were diverted to the war. As a
result of the war, by 1919 Germany was no longer
the second most economically advanced nation in
the world.
The terms of the Treaty of Versailles ordered that
Germany had to pay huge sums in reparations to
the Allies. In 1921, as Germany could not pay,
French and Belgian troops invaded and occupied
the Ruhr to take goods and raw materials.
During 1923 Germany printed more money to pay
striking workers. Hyperinflation resulted, wiping out
the value of savings.


What point on the business cycle is this point in history describing?
What is hyperinflation?
Station 4: The Great Recession (2008)



The Great Recessionwhich officially lasted from December
2007 to June 2009began with the bursting of an 8 trillion dollar
housing bubble. The resulting loss of wealth led to sharp cutbacks
in consumer spending. This loss of consumption, combined with
the financial market chaos triggered by the bursting of the bubble,
also led to a collapse in business investment. As consumer
spending and business investment dried up, massive job loss
followed. In 2008 and 2009, the U.S. labor market lost 8.4 million
jobs, or 6.1% of all payroll employment. This was the most
dramatic employment contraction (by far) of any recession since
the Great Depression. By comparison, in the deep recession that
began in 1981, job loss was 3.1%, or only about half as severe.

Even after the economy stopped contracting in the summer
of 2009, its growth has not been nearly strong enough to create
the jobs needed simply to keep pace with normal population
growth, let alone put back to work the backlog of workers who lost
their jobs during the collapse. In the post-World War II recessions
before the early 1990s, it took an average of 10 months for the
economy to regain the jobs it had lost during the recession. But
after the early 1990s recession, it took nearly two years, and after
the early 2000s recession, it took over three-and-a-half years.
Unfortunately, the recovery from the Great Recession is following
the sluggish pattern of these last two recoveries, but likely with an
even longer timeline. In October 2010, 16 months after the official
end of the recession, the economy still had 5.4% fewer jobs than
it did before the recession started. Thus, the Great Recession has
brought the worst of both worlds: extraordinarily severe job loss,
combined with an extremely sluggish recovery.
The job loss during the Great Recession has meant that family
incomes have dropped, poverty has risen, and adults as well as
children have lost health insurance. The bursting of the housing
bubble and the drop in the stock market has meant that family
wealth has dropped dramatically, as well.

Economic Bubble: A theory that security prices rise above
their true value and will continue to do so until prices go into
freefall and the bubble bursts.


Explain in your own words, what is an economic
bubble?



Describe the effects of the 2008-2009 economic
recession?