Jun 16, 2022
Economics

Activity: How Federal Reserve Policies Are Impacting Personal Finances (6/15/22 Fed Meeting)

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!

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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 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 has been working part-time at NGPF since 2014, interning through high school and college. With his knowledge growing alongside NGPF, after graduating from college in 2020, he joined the team to work full time with a focus on teacher onboarding. He is also the editor of the NGPF podcast. During his free time, he likes to try out coffees from different roasters across the world and try out new brewing methods.

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.

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.

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