Jun 16, 2022

Economics

What made the Federal Reserve meeting on June 15th so momentous? 

How much did the Fed raise interest rates and why? What is causing consumers so much pain? Is there a recession around the corner? Get answers to these questions and more in this activity.

Approximately every six weeks, the Federal Open Market Committee (FOMC) of the Federal Reserve meets. One of the policies at their disposal is the setting of short-term interest rates. Given the current economic conditions, the gravity of these meetings have increased significantly. The Fed Chair Jerome Powell meets with the press at the conclusion of the FOMC meetings to answer questions. Thanks to Ren for his help in creating an activity that uses Chair Powell's June 15th press conference as a learning opportunity.

In this activity, students will watch 4 short video segments of Chair Powell's press conference (1-4 minutes in duration) and answer questions. It's a great way for students to see economic concepts play out in real-life while also seeing links between the economy and personal finances. Just click on the deck below and enjoy!

-----------------------------

Did you know that NGPF has an Economics Directory? It categorizes more than 150 NGPF activities into 11 Economics topics. Check it out here. 

-----------------------------

Here's the link to the full video: https://www.youtube.com/watch?v=jIK9UogQBjE

Timestamps:

• 0:00~9:19 Chair Powell’s Opening Statement
• 9:19~11:36 Reflection on the last press conference’s comments   
• 11:36~15:05 Process of deciding to raise the interest rate by 0.75%
• 15:05~18:40  How high does the interest rate needs to be?
• 18:40~21:35 Managing the public’s expectations and maintaining the Fed’s credibility
• 21:35~24:07 Importance of the Fed providing clear guidance
• 24:07~28:55 Potential trade-off of higher unemployment to lower inflation
• 28:55~31:31 Consequences of higher unemployment from establishing price stability
• 31:31~35:16 Omitted sentence regarding the impact of monetary policy alone
• 35:16~37:17 Changes in consumer consumption and spending
• 37:17~38:52 Referencing and managing core inflation and headline inflation
• 38:52~39:51 The available data when the SEP was submitted 
• 39:51~42:34 Is inflation data enough to measure the effectiveness of the Fed’s policies?
• 42:34~44:12 Public’s sentiment on inflation
• 44:12~45:58 Inflation spreading across different sectors of the economy
• 45:58~47:36 Potential for a “soft landing” of lower inflation  
• 47:36~49:21 The risk of a recession from higher rate hikes
• 49:21~53:36 Reviewing last year’s monetary policy
• 53:36~56:21 Housing prices and the differences between 2008 and today

 

 

About the Authors

Ren Makino

Ren started interning at NGPF in 2014, and worked part-time through high school and college. With his knowledge growing alongside NGPF, he joined the team to work full-time after graduating from college in 2020. He is also the producer of the NGPF podcast. During his free time, he likes to try out coffees from different roasters across the world.

More posts by Ren

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

More posts by Tim

Ryan Wood

Ryan is the Partnerships and Adoption Manager for Next Gen Personal Finance’s midwest region. He brings his experience as a former teacher, curriculum designer, and sales and marketing professional to state organizations and school districts in supporting the implementation of their personal financial education efforts. He graduated from the University of Wisconsin-Green Bay and earned his teaching credential from Saint Mary’s University in Winona, Minnesota. He proudly taught at two rural high schools in Wisconsin before transitioning to curriculum design at NGPF, and is now excited to be on the front lines in delivering the best possible financial education in the midwest. He and his wife have three beautiful daughters, each of which inspire him to share the impact of being sound financial stewards both at home and as lifelong learners.

More posts by Ryan