Tag Archives: economy

Sep 26 2020

COVID-19 FINANCIAL LESSONS

The finances of many people have been greatly affected by the COVID-19 pandemic.  Some of these recent financial situations are:

  • Large numbers of households lacked an emergency fund, and were not prepared for unexpected financial difficulties.
  • People who encountered difficulties making their mortgage and rent payments were offered relief and protection options to avoid losing their place of residence.
  • Monthly payments and interest on student loans were suspended until a later date.
  • Consumers lost nearly $80 million as a result of coronavirus-related fraud. Some common scams were offers to receive stimulus checks sooner, fraudulent unemployment claims, threats of utility shutoffs, online shopping and price gouging for high-demand products such as sanitizer and paper goods.
  • COVID-19 surcharges were added by some businesses and restaurants to cover increased cleaning, sanitation, and food costs. Some dentist offices added an “infectious disease” or a “personal protective equipment” charge.
  • A coin shortage resulted from banks and coin-heavy businesses being closed, lower U.S. Mint production, and increased contactless payments. To adapt, stores gave store credit or a free drink or chips when coins were not available for correct change.

For our current and future times of crisis, these money management suggestions are offered:

  1. Learn about federal, state, and local government assistance programs.
  2. Reassess and review your budgeting priorities.
  3. Reduce and avoid debt; contact creditors to discuss revised payment plans.
  4. Start to rebuild your savings cushion.
  5. Use online tools for managing finances and to automate savings and payments.
  6. Increase your awareness of possible frauds and scams.

For additional information on managing money during COVID and future times of crisis, go to:

Link #1

Link #2

Link #3

Teaching Suggestions

  • Have students talk to others about the financial difficulties and actions taken in recent months.
  • Have students create a video with suggested actions that a person might take when facing financial difficulties.

Discussion Questions 

  1. What are reasons that people might not prepare for unexpected financial difficulties?
  2. Describe actions you might take to prepare for unexpected financial difficulties.

 

Dec 16 2017

Personal Financial Satisfaction

The Personal Financial Satisfaction Index (PFSi), reported by the AICPA (American Institute of Certified Public Accountants) is at an all-time high.  This quarterly economic indicator measures the financial situation of average Americans.  PFSI is the difference between (1) the Personal Financial Pleasure Index, measuring the growth of assets and opportunities, and (2) the Personal Financial Pain Index, which is based on lost assets and opportunities. The most recent report had a Pleasure Index 68.1 in contrast to a Pain Index of 42.1, resulting in a positive reading of 25.9, the highest since 1994.

While the stock market is high, unemployment is declining, and inflation is low, remember the economy is cyclical.  Be sure to consider and plan for your long-term goals. Stay aware and position your financial plan appropriately to safeguard finances when the economy is in a downturn.  Also, analyze your cash flow to an attempt to increase savings, including an appropriate emergency fund.

For additional information on financial satisfaction, click here.

Teaching Suggestions

  • Have students create an action plan for situations that might be encountered in times of economic difficulty.
  • Have students create a team presentation with suggestions to take when faced with economic difficulties.

 Discussion Questions 

  1. What are examples of opportunities that create increased personal financial satisfaction?
  2. Describe actions a person might take when faced with economic difficulties.
Oct 15 2016

How the Presidential Election Will Affect Your Investment Strategy

“The sky is falling!  If my chosen candidate doesn’t win, the markets are doomed and so are my investments.”

In this article, Bijan Golkar points out that a presidential election can cause excitement or despair depending on if you are a Republican or a Democrat and who the major parties nominate for the highest and most powerful office in the world.

The article discusses market returns both before and after a presidential election year and some of the underlying reasons for market volatility.  Then the article stresses the importance of a person’s long-term goals and a plan for long-term growth as opposed to “emotional investing.”  Finally, the article discusses the pros and cons of our economy that could affect investment values.

For more information, click here. 

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Discuss the importance of a long-term investment plan that will take advantage of the time value of money.
  • Describe some of the pitfalls of “emotional investing.”

Discussion Questions

  1. What are the typical characteristics of an emotional investor? Of a long-term investor?
  2. What are the advantages of a long-term investment program when compared to “emotional investing?”
Jul 9 2016

Bonds and Interest Rates

“Interest rate changes are among the most significant factors affecting bond return.”

When it comes to how interest rates affect bond prices, there are three cardinal rules.

  1. When interest rates rise–bond prices generally fall.
  2. When interest rates fall–bond prices generally rise.
  3. Every bond carries interest rate risk.

This article describes how each of the “3 cardinal rules” described above affects a bond investment.  It also explains the role the Federal Reserve plays in determining interest rates in the economy.  Specifically it describes the federal funds rate, the discount rate, and basis points for bond investments.

Finally, this article provides information on where to find economic indicators that measure not only changes in interest rates but also other economic indicators for the nation’s economy.

For more information, click here. 

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Review why investors choose bonds for their investment portfolio.
  • Explain how the three cardinal rules described in this article affect a bond’s value.

Discussion Questions

  1. Assume you are 35 years old, married, and earn $85,000 a year. In what circumstances would bonds be a good choice for your investment portfolio?  In what circumstances would bonds be a poor choice?
  2. What happens to a bond’s price if interest rates in the economy increase? If interest rates in the economy decrease?
  3. In addition to interest rates, what other factors that could affect the value of a bond?
Mar 12 2016

Investors Eye Trump Card’s Election Impact

“The presidential election is eight months away but ‘political risk’ is already being felt on Wall Street, as money and politics collide in a flurry. . .”

In this article, Adam Shell describes how the circus-like 2016 presidential race is creating uncertainty on Wall Street.  This uncertainty centers on the candidates and how they promise to deal with select industries, trade, tax policy, and globalization.

For example, many of Donald Trump’s campaign speeches are protectionist in nature and some on Wall Street worry that Trump will build a wall around the United States choking off globalization and world trade.

For Wall Street, Hilary Clinton is also problematic.  She has been a vocal critic of the pricing practices of the pharmaceutical industry.  She is also a proponent for more regulation on the financial industry and has suggested that banks involved in speculative investments should pay a “risk fee.”

As the campaigns develops between establishment and anti-establishment  candidates, it should be an interesting run up to the November elections that could impact Wall Street and investors.

For more information, click here.  

Teaching Suggestions                           

  • You may want to use the information in this blog post and the original article to stress how politics, the financial industry, and investing are intertwined.

Discussion Questions

  1. How do you think the uncertainty associated with this presidential election affects the financial markets and investing?
  2. Why could protectionism hurt the U.S. economy and Wall Street investors?
  3. Is globalization good for the U.S. economy? Is it good for investors?
Nov 28 2015

Low Gas Prices Are Set to Spur Holiday Spending

“Falling gas prices have put consumers in a good mood.”

According to a survey conducted by the National Association of Convenience Stores (NACS), more than 4 in 5 Americans indicate falling gas prices impact their feelings about the nation’s economy and as a result they will spend more during the upcoming holiday season.  In fact, more than one in four consumers (26 percent) expect to increase their spending during the 2015 holiday season–a 7-point jump over the past month and the highest percentage this year.  Also the survey finds that women are more optimistic than men.  For retailers, this statistic is even more encouraging because women do more holiday shopping when compared to men.

For more information, click here.

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Discuss how holiday spending impacts a family’s budget.
  • Describe methods that consumers can use to save the money and budget for holiday spending.

Discussion Questions

  1. Does the price of gasoline affect your spending on other items such as food, clothing, medicine, luxury items, and gifts?
  2. How can you avoid spending “too much” during the holiday season?
  3. What steps can you take to save the money needed for gifts and other holiday expenses?
May 9 2015

How Much You Have to Earn to Be Considered Middle Class in Every US State

“Pew defined middle class households as those earning 67%-200% of a state’s median income.”

A recent analysis from Pew Charitable Trusts’ Stateline blog found that the middle class shrunk in every state in the U.S. between the years of 2000 and 2013–the most recent data available.  This article by Libby Kane and Andy Kiersz also provides a detailed table that displays the median income and middle class incomes for each of the 50 states.  Finally, the information in this article points out that the definition of middle class often depends on where you live.  For example, you can feel middle class even if you earn$250,000 a year in some areas of the country which is about five times the $52,250 median income for the entire United States.

For more information, click here. 

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Discuss what it means to be middle class in the United States.
  • Stress how income relates to financial planning, investing, and the time value of money.

Discussion Questions

  1. While the median income for the United States is $52,250, the median income and the middle class incomes for each state vary. What factors account for the difference in these income amounts from one state to the next?
  2. Assume you are offered a new position within your company that will pay $6,000 more than your current annual salary. If you take the new position, you will have more responsibility and it will require that you work longer hours and travel away from home and family on a regular basis.  Do you feel the extra money is worth the changes that will be required if you take the new position?
  3. If you decide to take the new higher-paying position, what would you do with the extra money?
Jan 14 2015

Raise a Glass and Toast the U.S. Economy in 2015

According to Mark Hamrick, Washington Bureau Chief, at Bankrate.com, “We go into 2015 and put the very bitter memory of 2007, 2008 behind us.”

With the national unemployment rate down to 5.8 percent, 2015 should be a good year for the economy.  According to Hamrick, “The economy has really done a great job of damage repair, with acceleration here recently with the quality of jobs being added.”  This trend will continue as employers are expected to continue adding workers in 2015 at a monthly pace of about 200,000 each month.

In addition to a lower unemployment rate, projected U.S. economic growth of nearly 3 percent over the next 12 months and stock prices near record highs should continue to fuel the nation’s economy.  On the down side, expect the Federal Reserve to raise interest rates around June 2015.  Also, there is the unknown factors of political and social unrest around the world and the typical global economic problems that could be a drag on the economy.

For more information, click here.

Teaching Suggestions

Note:  There is a 2 minute video that accompanies this article that you may to use as part of your classroom presentation.

You may want to use the information in this blog post and the original article to

  • Discuss the current state of the economy.
  • Explain why unemployment rates, interest rates, political and social unrest, and global economic problems can affect the U.S. economy.

Discussion Questions

  1. Although many economists and investors are enjoying the economic recovery over the last few years, many individuals do not share the same optimism. How do you feel about the nation’s economy?
  2. Are you optimistic about your own economic future? What specific steps can you take to improve your personal economic future?
Sep 13 2014

U.S. Job Growth: Eight-Month Low, Labor Force Shrinks

U.S. employers hired the fewest number of workers in eight months in August and more Americans gave up the hunt for jobs . . .”

This Reuters article describes current employment trends and the effect it has on both the economy and the actions of the Federal Reserve.  Specifically,

  • Nonfarm payrolls increased 142,000 in August after expanding by 212,000 in July.
  • The jobless rate fell one-tenth of a percentage point to 6.1 percent in August.
  • The lower jobless rate in August was the result of more people dropping out of the labor force and not because of an increase in working Americans.
  • The Federal Reserve Board and Fed Chair Janet Yellen will use the weakness in the unemployment numbers to keep interest rates at present levels in order to provide a stimulus for the economy.

Specific information about different industry sectors, labor force participation, the number of part-time employees, etc. is also provided in this article.

For more information go to http://www.reuters.com/article/2014/09/05/us-usa-economy-idUSKBN0H008E20140905

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Reinforce how the nation’s economy can affect a person’s ability to obtain employment, develop a financial plan, and achieve both personal and financial goals.

Discussion Questions

  1. Assume you are unemployed and looking for a full-time position after graduating from college.  What knowledge, skills, and experience do you have that will make an employer want to hire you?
  2. What steps can you take to provide financial security if you think the economy is about to experience a recession?
Jul 9 2014

The Sharing Economy

Saving money or earning extra income can be as easy as using an app to rent a car or lend someone your backyard tools. With about 5,000 sharing companies, organizations and programs in operation, consumers could save hundreds and even thousands of dollars a year.

The main focus of the sharing economy is car and bicycle rentals, home sharing, and shared nanny services.  But consumers can also borrow drills, saws, ladders, lawn mowers through a community tool shed.

To avoid obvious dangers, be sure to use a sharing service that screens potential customers with background checks and identity verification. Technology can increase trust with online profiles and reviews from users.

There is also money to be made in the sharing economy by providing rides to others or renting out an extra bedroom. Before getting involved in the sharing economy, be sure to have proper insurance coverage and an understanding of tax implications. Participants in the sharing economy also note the social benefits of connecting with others from around the world.

For additional information on the sharing economy, go to:

http://www.kiplinger.com/article/business/T049-C000-S002-cash-in-on-the-sharing-economy.html

http://www.kiplinger.com/article/spending/T050-C000-S002-sites-to-help-you-save-make-money-by-sharing.html

Teaching Suggestions

  • Have students research various apps that facilitate transactions in the sharing economy.
  • Have students create interview questions that they might ask someone who is a buyer or seller in the shared economy.

Discussion Questions 

  1. What benefits are present for individuals and society as a result of the sharing economy?
  2. Explain how technology helps to increase the participation and acceptance of sharing economy activities.
  3. What concerns should be addressed when participating in the shared economy?