May 04, 2022

Economics

What is the Federal Reserve fighting? How much are interest rates going to rise? 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 Ryan and Ren for their help in creating an activity that uses Chair Powell's May 4th press conference as a learning opportunity. 

In this activity, students will watch 5 short video segments of Chair Powell's press conference (1-3 minutes in durations) 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! 

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Any budding economists in your class? Channel their energies into the NGPF's Guess the CPI Contest and your class could win a prize. Get your predictions in before May 11 at 8:30am ET and good luck! 

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

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Here's a video link to the entire press conference with timestamps below

Timestamps:

• 0:00~7:45 Chair Powell’s Opening Statement
• 7:45~10:20 Outlook on unemployment rates and their impact on inflation
• 10:20~12:30 Confidence in slowing hiring without leading the economy to a recession
• 12:30~15:40 Expectations of results from raising the federal funds rate by 50 basis points
• 15:40~17:48 How the Fed examines financial conditions when deciding to raise rates
• 17:48~19:37 The risk of inflationary psychology and the state of inflation expectations 
• 19:37~21:24 News on Ukraine and China adding to headline inflation and supply chain issues  
• 21:24~23:05 Curbing demand imbalance
• 23:05~24:38 The job vacancies to inflation ratio 
• 24:38~25:34 Fed’s broad view of financial conditions
• 25:34~27:47 Explanation to the general population on the Fed’s work to curb inflation
• 27:47~30:44 Potential for a decrease in consumer spending leading to a recession
• 30:44~32:00 The role of the Fed staying out of politics
• 32:00~35:46 Former Chair Paul Volker’s courage to make the right decision and the current board’s focus on price stability
• 35:46~37:10 How the Fed will decide the need to move policy to ‘restrictive’ levels
• 37:10~39:25 Uncertainty of the effects of shrinking the balance sheet
• 39:25~41:10 On Chair Powell’s decision to address the American people in his opening statement
• 41:10~42:38 Raising interest rates to decrease demand
• 42:38~45:08 How the Fed has adapted since Fall 2021
• 45:08~47:30 Racial inequities in unemployment and having price stability lead to a labor market that serves all Americans

About the Authors

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

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

Ryan Wood

Ryan grew up with and maintains a love for learning. He graduated from the University of Wisconsin-Green Bay with a degree in Business Administration and worked in sports marketing for a number of years. After living in Texas, Colorado, Tennessee, and Minnesota, the call of education eventually brought Ryan back to his home state of Wisconsin where he was a Business and Marketing teacher for three years. In his free time he likes to spend time with his wife and daughter, play basketball, read, and go fishing. Now with NGPF, Ryan is excited to help teachers lead the most important course their students will ever take.

More posts by Ryan