Where We Are and Where We're Going: Recession Analysis

Table of Contents

• Team
• Core Questions
• Code Roadmap
• Tools Used
• Major Findings
• Contact

Presentation Link - https://docs.google.com/presentation/d/1pjksgjoApZw2lJrajUH_eCMelOyOLqUxjkDwT6S1p7k/edit#slide=id.p

Team

• Evan Paliotta
• Matt Newman
• Ricky Gunawan

Core Questions

• What is the current state of global markets?
• What happens to GDP, employment, interest rates, money, velocity, and the S&P 500 after a technical recession?
• What do these findings suggest about the post Coronavirus Recession?

Code Roadmap

• To answer these questions, we started by analyzing the current state of the global economy (May 2020). The country_stock.ipynb file contains the code for the global analysis.
• Subsequently click the outline.ipynb file to see the U.S. historical recession analysis.

Tools Used

• Pandas
• HV Plot visualization tools
• Plotly Express visualization tools
• Numpy
• Panel
• Federal Reserve API
• Monte Carlo Simulation

Major Findings

• Global Analysis: Every country's market is suffering except the effects are exacerbated in developing countries
• GDP: In every recession except the most recent Great Recession, GDP increases one year from the start of the recession.
• Unemployment: In two of the eleven recessions we measured, unemployment decreased nominally. In the other nine instances unemployment rose.
• Federal Funds Rate: In all measured cases, interest rates were lower one year after the recession started.
• Velocity: In two of the eight instances, velocity rose, in the other six, it fell. On average, consumers spent less per unit of currency at the end of one year than they did at the beginning of the recession. Since velocity is a metric of human psychology, this data suggests consumers feel the effects of a recession for a extended period.
• Money Supply: Half of the time the Federal Reserve assists to expand the currency supply while the other half it contracts supply. We believe the Federal Reserve amends the money supply based on the inflationary or deflationary pressures of the given time.
• Despite GDP increasing most of the time, there is a greater liklihood that you will roughly break even in the S&P 500 if you invest at the beginning of a recession. Ergo, there is a diversion between the real economy and the overall stock market.
• Although the U.S. economy will not enter a technical recession until July 1, 2020, we can make estimates of starting points and extrapolate outcomes based on our findings. Our findings illustrate this upcoming recession will most likely have an increase in GDP, greater unemployment, lower interest rates (despite rates being at zero), and decreased velocity.

Contact

Evan Paliotta - paliotta.evan@gmail.com

Project Link: https://github.com/evanpaliotta/Recession_Analysis

LinkedIn - https://www.linkedin.com/in/evanpaliotta/