You can’t get away from news about the economy today. Falling stock prices, bailouts to banks, rising unemployment, sky-high gas prices and a general fear about the economic future fill the headlines. As a student, you have a lot on your plate – classes, tests, sports, clubs, having some fun (although as a professor, I’d advise fun in moderation!) and meeting new people. So should you yawn and pass by the economic headlines because you think they don’t affect you now? I’d say only do this at your own risk, and here’s why.
First, there are some obvious parts of the economy that affect everyone, including students. Gas and food prices are two good examples. Both these prices have risen substantially during the past few years, and so this leaves less money to spend on other things. So keeping track of gas and food prices, and understanding why they go up (and may come down) will give you some heads up on what these two necessities will do to your wallet.
How about the stock market and bank failures? If you don’t own stocks or have much money in the bank, should you care? Yes, you should! The stock market is one of our best overall indicators of the health of the economy. Think of the stock market as a daily election on the economy, where investors are voting with dollars rather than ballots. If investors are worried about the economy and that is reflected in a plunging stock market, then private companies will likely reduce their operations and hiring, and this could affect jobs, not just this year, but for many years in the future. And certainly most students want to get good-paying jobs when they graduate.
And then there are the bank bailouts occurring at unprecedented levels. Again, you may be motivated to think, so what, it means nothing to me. Wrong! One reason these bailouts are happening is to keep the financial system from clogging up – sort of like a hardening of the arteries for money flows. What if you need a loan for a car or a student loan? If the financial system were to freeze, the money might not be there to borrow or it may only be available at very high rates.
On the other hand (economists are famous for seeing both sides of the coin!), where’s the money for the bailouts coming from?
Ultimately, from taxpayers. And although your tax bill may not be high now, when you’re finally working in your career job, it will be much higher, and it could be even higher if the banks don’t repay what the government has loaned them.
So remember, government money is your money, so you should be concerned over how it’s spent.
Hopefully I’ve gotten your attention about the economy and why you should care. Now, what should you do? The first step is to be informed. Read beyond the economic headlines and try to get some background on what’s happening and why. Periodically, take a look at weekly financial magazines that don’t require a degree in economics to understand – there are plenty of these at newsstands. Last, maybe even consider taking a course in economics as an elective. Because the fact is much of your future will be tied to the economy.
E-mail your thoughts on the economy to [email protected].
