What A Bad Economy Means 1 What are the basic ideas presented in the Ripple Effect video What industries were mentioned as affected both directly and indirectly Ripple Effect Certain job losses affecting other job losses Bank manager restaurant meat supplier dog handler and waitress 2 Understand the recession s causes in a nut shell You don t need to know everything in detail but you need to be able to discuss it Recession 2 consecutive quarters of decline in a countries economic growth Consumer s cut back on purchasing Companies have to cut back on production by laying off employees and in turn even less is bought Recessions with a financial crisis last longer Factory production the purchasing of big ticketed items increases overall purchasing are all indicators that the economy is coming out of the recession 3 Describe the data related to Where are Home Loans Under Water Late 2013 Not every state but be able to describe the trends as related to each region Underwater paying more than home is worth Causes Top foreclosure states Florida California Illinois Arizona Nevada Utah and Georgia Irrational exuberance in the housing market led many people to buy houses they couldn t afford In 2006 the bubble burst as housing prices started to decline This caught many homeowners off guard who had taken loans with little money down As they realized they would lose money by selling the house for less than their mortgage they foreclosed Escalating foreclosure rates panicked banks and hedge funds secondary markets now realized they were facing huge losses By August 2007 banks became afraid to lend to each other because they didn t want these toxic loans as collateral This led to the 700 000 000 000 bailout and bankruptcies or government nationalization of Bear Stearns AIG Fannie Mae Freddie Mac IndyMac Bank and Washington Mutual By December 2008 employment was declining badly Once the layoffs started more people couldn t pay for their mortgage causing more defaults and foreclosures And the consumer stopped buying Construction halted on the building of new homes 4 Be able to describe trends related to college costs as related to median family income and student loan burdens College costs are rising exponentially in comparison to median family income 5 Know the specifics of the Flat Paycheck Recovery Flat Paycheck Recovery Unemployment figures are creeping down reaching their lowest rates since 2009 Third quarter 2013 GDP figures were revised up to a whopping 4 1 which means job growth will likely continue But the jobs being created aren t like those we ve lost While two thirds of the jobs lost during the recession were middle income jobs about half of those created since have been in low wage sectors like tourism hospitality and retail sales What s more a greater proportion of them are temp positions than in recoveries past The result is that although wage growth has begun to pick up a little bit it s far below what most economists would expect at this stage of a recovery In an economy that s 70 based on consumer spending that matters a great deal If people don t get paid more they won t spend more and that will hold back private sector growth Government shutdowns partisan politics and a global slowdown haven t helped much either Middle class shrinking future potentially holds multigenerational living arrangements Middle class to homeless WHY HOW Layoff for jobs with few alternatives Multiple family commitments divorce kids Most people don t have enough savings for the rough patches Perceived as overqualified for many jobs Used to have decent insurance not now Kids daycare expenses 50 a day don t do it Gimme that house back the one that you couldn t afford in the first place Is it really headed in the right Direction Depends who you ask Professional and business services up 19 000 Manufacturing up 9 000 Leisure and hospitality up 9 000 Construction down 16 000 Health care down 6 000 Temporary help services up 40 400 Transportation and warehousing down 600 Retail up 55 300 Government jobs down 13 000 Financial services up 4 000 6 A number of reasons have been given for companies failing to hire more workers even though it may seem that they are in a position to do so What were the factors discussed Know the specifics as outlined Why won t you hire me Seem to be doing okay with what we have Trimmed a lot of fat in the past few years and got better at things Earnings may sound good but everything is relative Uncertainty Uncertainty Uncertainty Can I get it cheaper elsewhere Don t want to go through that again Fiscal Who Knows 7 Understand the factors in the housing market that have adversely affected the economic recovery The housing market continues to climb out of the deepest downturn since the Great Depression Banks and households have written off large piles of bad debt and lending is picking up again While the housing market has perked up in the past two years for example new construction and existing home sales are still below prerecession levels Credit has begun easing but mortgages are still hard to get And ultra low mortgage rates have begun moving higher this year Home prices meanwhile are still well below 2006 peak levels in many parts of the country leaving more than 10 million owners who bought at the peak owing more than their home is worth That lost home equity helps explain why the wealth effect of rising housing and stock markets which typically spurs further economic growth has been so muted in the recovery 8 Have an understanding of the 3 symptoms of our sick job market The labor force participation rate is very low at 63 only 63 of people of working age either have a job or are looking for a job Lowest since women started entering labor force Average unemployed person has been unemployed for 37 weeks Almost 4 million have been out of work for 6 months or longer Wages are stagnant Wages have not gone up adjusted for inflation Contributed to income inequality and feeling that average American is being squeezed at the wallet 9 The recession has caused many to question the importance of work relative to other aspects of life In this regard what information did the Christian Sciences Monitor article provide in support of such a claim People put so much faith in work It s their identity their driving focus Their identities are Football coach lawyer accountant etc it is their job People are trying to refocus and reevaluate their perception of work I put so much into it it became my
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