Economic Effects: Are we financially healthy?

December 20, 2002

By Marcie Young
NewsHour Extra

As economists and politicians try to figure out how to improve the sluggish economy, juniors at Eastern High School say they're feeling the effects of job insecurity and low consumer confidence.

President Bush this month replaced his economic advisers with a new group he hopes will help lure the economy out of its current sluggish growth.

With unemployment at its highest levels since 1994, a still-shaky stock market and low consumer confidence, the economy could become a key political issue as the nation gears up for the 2004 presidential election. President Bush is hoping to avoid the fate of his father, who lost to Bill Clinton in 1992 after the Democrats blamed the slowing economy on the Republican president.

At a press conference, Stephen Friedman, the president's new top economic adviser, said he will "address pressure on family budgets and savings, the need to create more jobs, slow growth in our overseas export markets, and disappointing business investment."

Is the economy healthy or not?

So far, the president's economic plan has focused on long-range tax cuts that give upper-income taxpayers and businesses the biggest benefits. The theory is that if businesses save money on taxes, they will buy more equipment and hire more workers.

Critics like Jeff Madrick, a contributing economics columnist for the New York Times and author of a new book, Why Economies Grow, say the government should extend unemployment benefits -- a policy President Bush has endorsed. Madrick also suggests giving money to state and local governments "who are going to start cutting back significantly on education and health care."

Meanwhile, statistics suggest that the economy is slowly recovering from a recession (period of negative growth). Consumer confidence increased slightly in November for the first time in almost half a year, but it is still low.

Unemployment is hovering around 6 percent, however economists note that the official figures only measures people who are actively looking for jobs; many people have dropped out of the job market because they believe they cannot find a suitable job.

The nation's central bank, the Federal Reserve, characterized the current period as a "soft spot" that the economy must work through.

Student Perspective:
Recently, students from Eastern High School in Washington, D.C. gathered to discuss their thoughts on the state of the economy.

Sixteen-year-old Cienai Wright said she worried a continuing economic slump could have long-term effects on how students live.

"If the economy doesn't get any better, it's really going to affect us, and not in a good way," she said.

Wright quit her job at a home furnishing store so she could concentrate more on school, but classmate Wendall Jefferson said he's concerned about what's going to happen once high school is over.

Jefferson, a 17-year-old senior currently applying to college and for scholarships, thinks getting financial aid for school is going to be tougher than in past years because of the recent downturn in the economy.

Jefferson said he thought that since companies and organizations aren't making as much money as they have in the past, contributions for scholarship programs are suffering, making it more difficult for students to get funding for a college education.

Job availability and employer requirements also weigh in as sources of student concern. Sixteen-year-old Maurice G. Brown III said he's worried that when it comes time for new high school graduates to look for permanent employment, those already in the work force will get hired over younger, less experienced workers.

Brown isn't the only high school student who's nervous about job security. Although Danielle Cosey, 16, has worked with kids at her church for three years, she's noticed the toll the economy is taking on others who work with her. She said many employees have been fired or have gone without pay raises because of financial issues.

"I watch people come and go; I guess I'm one of the lucky ones," she said.

Even though Cosey feels she is secure in her position, she agrees with her classmates that the economy is making it more difficult for teenagers to hold onto jobs. Often teenagers are dependent on a steady paycheck to pay for cell phone bills, school supplies, college applications and other items. Others even offer to help their families by paying the electric or phone bill.

"You'd be surprised how many kids have jobs…if they were to lose their jobs, it would have a negative impact on the whole family," history teacher Reynauld Smith said.

Students are also learning that in lean economic times, they can't necessarily count on pay raises to improve their finances. Brown, who has worked at the Ecological Society of America for more than a year and a half, said he hasn't received a raise in that time, nor does he expect to.

Even those high school students who, like Cosey, have maintained jobs are feeling the pinch.
"The money just isn't there anymore," Cosey said, "not like it used to be."


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