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JA Teens Survey: The Financial Impact of COVID-19

JA Teens Survey: The Financial Impact of COVID-19
 
Introduction
From April 8 to 14, 2020, Wakefield Research conducted a survey on behalf of Junior Achievement USA and Citizens Bank | Citizens One. The survey of 1,000 13- to 18-year-olds not attending college focused on teens’ financial goals and concerns. An overview of those findings is contained here in the JA Teens Survey: The Financial Impact of COVID-19 Executive Summary.
 
Concerns About COVID-19
Participating teens were first asked about their level of concern regarding the financial impact of COVID-19 on them, their families, or loved ones. More than two-thirds (69%) of teens surveyed said that they were “somewhat” or “very concerned” about this impact. 
 
Additionally, most teens (72%) said that they had a discussion with their parents or guardians about finances related to COVID-19. Respondents to the survey were also asked what concerns them most about COVID-19. The possibility of a family member other than a parent or guardian getting sick topped the list (60%), followed by a parent or guardian getting sick (59%). The impact of COVID-19 on survey respondents’ plans for the future was next in their list of concerns (57%). Far fewer teens (39%) were concerned about getting sick themselves. 
 
Impact on the Future
On the topic of future plans, respondents were asked a variety of questions related to this topic. Nearly half of high school juniors and seniors (44%) say COVID-19 has impacted their plans to pay for college. Of those saying their plans have changed, most (58%) say that they are now more likely to take out a student loan to pay for college. 
 
Beyond those just planning to go to college, more than a quarter of teens (27%) say that their plans after high school graduation have changed. More than a third (35%) replied that COVID-19 would change their expected living situation after high school graduation, nearly as many (30%) say that COVID-19 is impacting their expected college starting date, and a significant percentage (27%) responded that they now plan to work to earn money. Nearly one-in-five (18%) say that the COVID-19 pandemic has impacted their career choice. 
 
Teens and Work
On the topic of work, nearly half of teens (42%) say they earn money through odd jobs working for other people (lawn mowing, shoveling snow), and more than a quarter (29%) have a job with an outside employer. Of those teens working outside the home, nearly half (46%) say they or their families depend on their income. Of those teens working, almost two-thirds (62%) responded that their jobs require them to violate social distancing and safety recommendations related to COVID-19. 
 
Other Findings
A significant percentage of teens (42%) say that their parents or caretakers are now working from home in response to COVID-19, while more than a quarter (28%) responded that their parents or caretakers are working fewer hours as a result of the pandemic. About a tenth (13%) say that their parent or caretaker has lost their job as a result of COVID-19. 
 
Job loss has also hit teens. A quarter of teens (25%) say they have lost odd jobs, such as lawn mowing and snow removal, as a result of COVID-19. Nearly as many (21%) have lost babysitting and pet-sitting jobs. Almost one-in-five (18%) have lost a job at an outside employer due to COVID-19. 
 
Methodology
The JA COVID Impact Survey was conducted by Wakefield Research (www.wakefieldresearch.com) among 1,000 U.S. teens ages 13-18, not currently enrolled in college, between April 8 and April 14, 2020, using an email invitation and an online survey.  
 
Results of any sample are subject to sampling variation. The magnitude of the variation is measurable and is affected by the number of interviews and the level of the percentages expressing the results. For the interviews conducted in this particular study, the chances are 95 in 100 that a survey result does not vary, plus or minus, by more than 3.1 percentage points from the result that would be obtained if interviews had been conducted with all persons in the universe represented by the sample.
 
Disclosure: Citizens Bank and Citizens One are brand names of Citizens Bank, N.A. Member FDIC. 
 

Shining a Spotlight on American Business Women’s Day

September 22 is American Business Women’s Day, a day to honor and reflect on the accomplishments, successes, and contributions of American women and female business owners in the workforce. The day was first celebrated in 1949 by the American Business Women’s Association and officially recognized by Congress in the early 1980s.

Today, Junior Achievement celebrates the 75 million women in the workforce by shining a light on 3 women from various industries who have reached and accomplished business success.

Tammy Barlette is co-founder of Athena’s Voice, a professional speaker company featuring 13 female fighter pilots from around the United StatesBarlette is a fighter pilot who served in the United States Air Force for over 20 years, retiring in September of 2018 as a Lieutenant Colonel.  She has flown multiple aircraft, including the T-37 Tweet, T-38 Talon, A-10 Warthog, MQ-1 Predator and MQ-9 Reaper, accumulating more than 3,000 total flying hours and over 1,500 hours of combat support time assisting and protecting troops on the ground in both Iraq and Afghanistan. She is also a graduate of the prestigious US Air Force Weapons School and has a Master of Arts in Christian Ministry. Lt Col Barlette lives in Tucson, Arizona, is married to a Federal Agent and has three children.

 

Yeva is the Co-Founder and CEO of SoloLearn, a global community of mobile code learners participating in the most engaging way to learn and interact with fellow coders around the world. With millions of coder profiles, SoloLearn is becoming a popular hub for young people to improve their competitive ranking in today’s world. Yeva holds an MBA Degree from Maastricht School of Management (the Netherlands) and is an Executive Program graduate from Stanford University’s Graduate School of Business. She started off implementing World Bank and USG programs in business and education, then sales, developer ecosystem development, and strategic partnerships as a general manager at Microsoft. More recently, she’s built a startup accelerator that created mobile games, robots, and ag-tech solutions. A coding boot camp was founded back in 2010 to pay for this, and still boasts of an 80% placement rate. It took a lot quick thinking, learning from successes and mistakes, from non-existing sources. These experiences were reflected in SoloLearn, which changes how programmers learn, build their professional reputations, and get jobs.

 

Yunha Kim is the Founder and CEO of Simple Habit, an award-winning app for daily stress relief.Simple Habit offers a personalized approach to your mental wellness needs. Discover more than 2,000 guided audio sessions from world-class meditation teachers, therapists and coaches. Simple Habit helps busy people care for their mental wellness in just 5 minutes. 

Founded in 2016, Simple Habit is now the #1 rated meditation app in the App store and 2018 Google Play Award Winner for Standout Wellbeing App. The app boasts 40,000 five-star reviews. Simple Habit has raised $12.8 million from investors including Foundation Capital, Y Combinator, New Enterprise Associates (NEA) and many other prominent CEOs in Silicon Valley, including Dropbox’s CEO Drew Houston and Gusto’s CEO Joshua Reeves.

Kim began her career in investment banking and built her first startup Locket when she was 23-years-old. Kim began to meditate to help manage the stress of startup life. The idea to build a more diverse, practical meditation app came to Kim when she was pursuing her MBA at Stanford. She dropped out of Stanford after one semester to build Simple Habit into the leading mental wellness platform for busy, stressed-out people. In 2017, Kim was honored by Forbes 30 Under 30 and Marie Claire's New Guard

Get to know the Trio: JA Q & A

 What does American Business Women’s Day mean to you?

Tammy Barlette: Having a day designated to honor women in business is a great opportunity to appreciate the challenges that have been overcome by so many.  For me, it is a reminder to stop, and recognize the accomplishments of women in business, paying particular attention to the pioneers. So many of the stories of those who were first have gotten buried and uncovering them is fascinating, inspirational and educational.

Yeva Hyusyan: I am not a big fan of days dedicated to Some Group.  If such a day exists, it indicates an unresolved issue, such as Women’s Day signals that there is something wrong with women in society. That's why I’d rather not have any “special” days. I’m not talking about holidays like Christmas or Halloween though.

Yunha Kim: It's an opportunity to celebrate businesswomen who have made a positive impact on our world. 

What is the best business or life advice you ever received?

Tammy Barlette: The best advice all around that has been given to me is, “it is not about you, it is never about you.”  This is something I always felt in my heart and one of the reasons I almost did not go into the speaking business.  I had thought, “I am not special, I just took a unique path and worked really hard.  I do not want to be in the spotlight.”  The ladies of Athena’s Voice speak to share the wisdom they have gained from their very unique life experiences.  The powerful messages shared through their stories shifts the way people think, guides them down different paths or highlights opportunity where they had not seen it before.  It is about the audience…always, in life and in business.

Yeva Hyusyan: “If you want quick results don’t think and act as a woman in man-dominated environments.”

Yunha Kim: “If you have an idea and you are passionate about it, pursue it to the best of your ability.”

What were, or is, your biggest challenge in being a woman in business or in your business industry? Biggest Advantage?

Tammy Barlette: Specifically addressing my current industry of professional speaking, the biggest challenge is shifting people’s mindsets away from the idea that our primary audience is women.  This is clearly a very important group to us and we take every opportunity we can to make a positive impact.  It is just as important, if not more, that we get in front of diverse audiences.  Our stories and messages offer unique perspectives that a broad range of audiences can benefit from.  Additionally, by getting in front of audiences that are predominantly male, we have the opportunity to make a positive impact on how women are perceived in the world.  That alone is a powerful influencer on the path to opening more opportunities for women. 

I will be quite frank here, even though being a women in the working world has come with many challenges, there are places where being a woman has the advantage.  The immense opportunity given to women in this day and age due to the movement to equalize things has opened a lot of doors that are not open to men.  I recognize that, don’t let those opportunities pass and utilize them to make the world a better place.  Balance is optimum and I look forward to the gender gap closing and a merge taking place where gender is not such an issue anymore.

Yeva Hyusyan:  I find being a woman an advantage today because the world is in need for a different perspective.  The challenge is to learn the language that has been created and refined over hundreds of years in male-dominated businesses.  

Other than the above, the business is about being the best – the smartest, the fastest, the most agile… being of a certain gender doesn’t help much…

Yunha Kim: Being a woman hasn't impacted my ability to fundraise or grow our company. Like many situations in life, I think it's all about how you frame your perspective. 

What is your favorite song or quote to inspire or motivate you?

Tammy Barlette: “When quitting is not an option, you find another way…don’t let it be an option.”    -Tammy “G.” Barlette

Yeva Hyusyan: There are many. Very much depends on the mood and what I’m up to. 

Yunha Kim: Mark Twain said it. “Twenty years from now you will be more disappointed by the things you didn’t do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.”

Basically… YOLO!

Making Sense: The Impact of COVID-19 on Business and Innovation

A Guide to How Entrepreneurs and Businesses Are Responding to COVID-19

COVID-19’s Impact on Business 

Unlike other viruses, such as the seasonal flu or common cold, the coronavirus, or COVID-19, is considered a “novel,” or new, virus because humans have had little exposure to it. Hence, we don’t have readily available treatments, like a vaccine, to prevent people from getting sick from COVID-19. As a result, the first line of defense against the disease is called “social distancing.” This means people are being encouraged not to be around other people unless it is necessary. 

 

In many cities and states, officials require so-called “non-essential” businesses to either reduce their operations or close completely to promote social distancing. While these businesses are referred to as non-essential, it doesn’t mean that they aren’t important. But it does mean that their closure will help limit the spread of COVID-19. 

 

Businesses affected include restaurants, which in many cases must close their dining areas, even though they can still prepare food for delivery or take out. Others that must close completely include hair salons, clothing stores, and various retail establishments that don’t offer what are considered “essential” products or services, such as food or medicine. 

 

Due to these restrictions and closures, businesses large and small have had to release many of their employees. This means people who worked for these businesses lost their jobs either temporarily, through a furlough, or permanently, through a layoff. Many of these people are eligible for unemployment benefits, which means that they will receive some amount of money from the government to help pay basic expenses like rent, house payments, and food. The hope is that non-essential business closures will only last a few months 

How Government Is Responding 

In response to COVID-19, the U.S. Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. At $2.2 trillion, it is the largest economic relief package in U.S. history. The goal of the CARES Act is to help businesses and individuals impacted by the economic downturn caused by COVID-19. 

The CARES Act has benefits for individuals, including a one-time check from the government for between $1,200 and $2,400, depending on their eligibility and tax-filing status. The act also makes changes to unemployment benefits that help filers receive more money from the government than they would under normal circumstances, and for a longer period. 

For small businesses, CARES offers short-term loans that can help these businesses cover necessary expenses, such as rent, utilities, and operational costs, during COVID-19-related shutdowns. CARES also includes a payroll protection program where small businesses can use low-interest loans to keep employees instead of having to let them go during the downturn. If businesses meet certain conditions during the coming months, the government may forgive some of these loans, meaning small businesses that qualify won’t have to pay back the money they borrowed. 

The Role of Business in Fighting COVID-19 

Since the early 1990s, global trade has grown substantially. With the development of the Internet, changes in trade policy, and global competition, much of the world’s manufacturing capacity has moved from more-expensive developed economies, such as the United States and Europe, to less-expensive emerging economies in Latin America and Asia, and especially China. As a result, the world now relies on “global supply chains.This means a product like a smartphone may have parts that were manufactured in four or five different countries and assembled in another country. 

In December of 2019, China reported its first cases of the disease in Wuhan, China, a region of the country involved with manufacturing. By January, China shut down all manufacturing in the region, as well as in surrounding areas, to contain the spread of COVID-19. This resulted in the largest drop on record of China’s manufacturing activity. The decline in manufacturing in China and other countries impacted by COVID-19, disruptions in transportation and shipping, and a spike in demand around the world for medical devices and supplies, has resulted in a strain in the global supply chain. As a result, there is a shortage of these materials in the U.S. and other countries, making it more difficult for medical professionals in our country and others to fight COVID-19 effectively. 

Businesses in the United States are stepping in and helping to find solutions to these shortages. Responses have included taking factories that manufacture automobiles and retooling them to make plastic face shields for doctors and nurses to use when working with sick patients. Other manufacturers that produce consumer goods, such as household appliances, are working on ways to make parts for ventilators and other medical devices in urgent demand. In California, engineers who might otherwise work on drones or robotics, are helping to fix or improve ventilators needed to treat the sickest COVID-19 patients. 

Large manufacturers of face masks, such as N95 respirators and surgical masks, have been asked to increase their production capacity for these urgently needed supplies. In addition to medical professionals, the construction industry uses N95 respirators. As a result, construction companies that use these masks and hardware retailers that sell them have been donating their supplies to local hospitals and first responders. 

One of the most significant challenges in fighting COVID-19 has been quickly identifying those who have the disease. There has been a shortage of medical testing for the virus, partly because there haven’t been tests available to identify the virus rapidly, and the capacity of government agencies to run tests is limited. In response, medical testing companies have been developing tests that can determine the virus in a few hours instead of over several days. Additionally, private labs, which process most of the medical tests generally conducted in the country, are adapting their facilities to run large numbers of COVID-19 tests. 

Innovation in the Face of Crisis 

Despite the best efforts of business to overcome these shortages, demand still outweighs supply. As a result, many entrepreneurs are working to bring solutions to the table. One way to accomplish this is to increase the usage of some of the existing medical products. For instance, there are several startup companies that, before COVID-19, were developing technologies to sterilize medical masks. These companies are working with public health officials in communities most impacted by COVID-19, such as Boston and New York, to use these technologies. While these approaches are still new, they hold the promise of allowing masks that were meant for one-time-use to be used up to 20 times. 

Advanced manufacturing companies that work with 3D printers are also helping with the fight against COVID-19. These printers can quickly form plastic into adapters that can allow ventilators meant for one patient to support two or more patients simultaneously. These printers can also create medical device replacement parts that might be hard to obtain due to parts shortages.

What Comes Next? 

While there is no guarantee the economic impact of COVID-19 will be short-lived, that is undoubtedly the hope of many. With social distancing, the broader adoption of masks by the general public, good hygiene practices, and more available testing, the goal is to make COVID-19 more manageable until a vaccine is available sometime in 2021. If that goal is met, it’s possible businesses currently closed can be reopened in a few months with certain guidelines and restrictions in place. 

 

In the long-term, history has shown that major events that impact the economy can result in long-term changes and innovation. For instance, following World War II, the world saw the widespread adoption of plastics, antibiotics, planned housing developments, interstate highways, jet transportation, and television. Many of these were in their infancy before the war. More recently, the years following the Great Recession saw the rise of gig-economy businesses such as Airbnb, Uber, and GrubHub, as well as a boom in financial technology, such as Apple Pay, Venmo, and Bitcoin. 

 

Time will tell what innovations may result from our current situation. Opportunities are clear with the demand for video conferencing technology as a result of the surge of remote work. Challenges exist in terms of the limitations of the global supply chain to respond to fast-moving events. There may be a teenager on a laptop right now who will take the lessons learned from the response to COVID-19 and help shape all of our futures. 

Making Sense: Work in the Time of COVID-19

A Guide to How COVID-19 Is Affecting Work and What Comes Next
 
COVID-19’s Impact on Jobs and the Ways We Work
Unlike common illnesses like the flu or colds, COVID-19 is different because people do not have a natural immunity to, nor an ability to fight easily, the disease. As a result, people who get COVID-19 tend to get sicker, and for longer than other illnesses they might experience. Because there is currently no vaccine for COVID-19, the best way to fight it is through mitigation measures, like social distancing. Social distancing involves things like staying at least six feet away from other people, as well as staying at home as much as possible, and avoiding being around groups of people.
 
To promote social distancing, federal, state, and local governments have taken steps to reduce the chances of people gathering. This means many businesses considered as non-essential, such as those that don’t provide food, medicine, or critical services, are required to close.
 
The result of these closures is that many employees have lost their jobs, either temporarily, through furloughs, or permanently, through layoffs. Most people who lose their jobs can receive unemployment benefits from the government. This means they get money to help pay basic expenses, like rent, house payments, and food. While recipients don’t make as much money as they did when they were working, they will get some help.
 
Some businesses that are considered non-essential are still able to continue to operate because employees can work from their homes. These workers continue to do their jobs and communicate and collaborate with others using tools such as video conferencing services, email, cell phones, and applications. Known as remote work, businesses that can take advantage of this approach include those based in offices, such as insurance companies, engineering firms, advertising agencies, technology providers, online retailers, real estate offices, and many others. You may experience something like remote work if you are doing school online. 
 
Even though remote work is an option for many, there are businesses like those involving travel, vacation rentals, or events planning, such as for graduations or weddings, that still may need to let employees go because of a decline in demand related to COVID-19. 
 
How Government Is Responding
In response to COVID-19, the U.S. Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. At $2.2 trillion, it is the largest economic relief package in U.S. history. The goal of the CARES Act is to help businesses and individuals impacted by the economic downturn caused by COVID-19.
 
Part of the CARES Act is the Paycheck Protection Program (PPP). This program is offered through the Small Business Administration and provides loans to small businesses to continue paying employees for up to eight weeks. If companies using this program meet specific requirements, the loans may be forgiven, meaning employers won’t need to pay the loans back to the government. Additionally, the government is providing one-time checks to individuals who qualify, as well as enhancing unemployment benefits in response to COVID-19. 
 
Help Still Wanted
With COVID-19, the United States is seeing a record number of Americans losing their jobs. However, the hope is most people will be out of work only for a short amount of time and that in a few months many of those who lost their jobs will be able to go back to work. In the meantime, some industries are still hiring during this current economic downturn.
 
Not surprisingly, industries that have seen a surge in demand in response to the pandemic are hiring. The most obvious is the health care industry. Doctors, physician assistants, nurses, medical technicians, first responders, lab technicians, and others with medical or health care backgrounds, are being recruited, especially in those communities with the most COVID-19 cases. In response to this need, some medical schools have moved up their graduation dates to ensure new doctors and other medical professionals can practice as soon as possible. Hospitals are also reaching out to retired nurses, lab technicians, respiratory therapists, and radiologists for help. Additionally, financial incentives are available to medical professionals willing to come from areas of the country not as hard-hit by COVID-19 to those dealing with large numbers of cases.  
 
The health care industry isn’t the only one hiring. Businesses that are considered “essential,” such as grocery stores, are adding stockers, checkers, and warehouse workers. Online retailers, shipping, and delivery companies are also increasing their payrolls in response to demand being driven by the fact most Americans are being encouraged to stay at home and are more dependent on products delivered to their front doors. Technology companies are also recruiting, especially those that provide platforms used for remote work, as well as online learning businesses that help deliver school curriculum to homes. 
 
Additionally, there are other professions, such as those in the skilled trades (electricians, plumbers, auto mechanics, etc.) who can continue working because their jobs are also considered essential. 
 
Going Back to Work
So, when can everybody go back to work? It’s a complicated question. First, the most effective cure for a virus like COVID-19 is a vaccine. Currently, the most optimistic timeframe for a vaccine being available is sometime in 2021.
 
It’s hard to imagine so many people not having jobs and staying in their homes for a year or more while a vaccine is in process. Not just because of the financial challenges this presents, but because people are social beings, and it could be difficult for most to practice self-isolation for so long. 
 
Elected officials and public health experts are exploring the best way forward, which may mean coming up with ideas for people to go back to work before there is a vaccine. 
 
If this approach is taken, it could mean a “new normal” for some time. For instance, once current cases of COVID-19 decline substantially and testing is more widely available, some people may go back to work with the understanding they continue social distancing, regular handwashing, and the use of masks and other protection when appropriate. While it may take time for a vaccine to be developed, effective treatments, such as medicines that won’t cure COVID-19 but will lessen the severity of its symptoms, may be considered. These are a few ideas being considered by officials and experts to deal with COVID-19 in the coming months. Whatever steps occur, jobs may come back gradually and not fully recover for a long time. 
 
What Comes Next?
COVID-19 will eventually be defeated. But it won’t happen overnight. In the meantime, many young people are graduating from high school or college or planning to do so soon. What does this mean for them?
 
In the near term, it could be a challenging time. New graduates may struggle to find a job over the next several months. If they are looking to start college or some sort of training after completing high school, there’s a good chance it will have to be done online, at least initially. For those planning for college or careers beyond 2021, the impact of COVID-19 may not be as much of a concern.  
 
Before that time, there may be an opportunity to make the best of staying at home. Essential skills, and even certifications, can be earned online for limited cost in the areas of coding, analytics, programming, project management, marketing, web development, and others. Just because you are staying home doesn’t mean you need to stand still. Ultimately our lives will get back to normal, but it will take some time. In the interim, this could be a unique opportunity to learn.  
 

Making Sense: Understanding the Financial Impact of COVID-19

A Guide to How COVID-19 is Affecting People and the Economy and What It All Means 

Making Sense of It All 

A lot has changed in a very short amount of time. At the beginning of 2020, the U.S. stock market was at an all-time high, the economy was experiencing an historic milestone of growth and things seemed to be going well for many people. Then, the coronavirus (COVID-19) appeared in the United States and in a very short amount of time everything changed. 

 

While things may seem uncertain, and maybe a bit scary, know that what we are experiencing with COVID-19 won’t last forever. We at Junior Achievement (JA) have some explanations about what’s happening, as well as answers to some of your questions when it comes to the financial impact of COVID-19. 

What Makes COVID-19 Different from the Flu or a Cold? 

COVID-19 is referred to as a “novel”, or new, coronavirus. This means it is new to humans, though it has probably been around in animals, such as bats, for a long time. It is believed that COVID-19 was first transmitted to humans from animals in Wuhan, China in late 2019. Because human immune systems – the human body’s way of fighting disease – haven’t had much experience with COVID-19, people who get it tend to be sicker for longer, though most people will recover from the disease. 

 

To help put COVID-19 into perspective, think of leveling up in a game. If it’s a level you’ve never experienced before, it may be harder and take you longer to beat it. But with enough time, you will win. For most people’s immune systems, COVID-19 is like a new level of a game. Eventually human immune systems will get used to battling COVID-19 and will win more easily, most likely through a combination of vaccines and an increase in natural resistance. But this won’t happen right away. 

 

In the meantime, people are being asked to practice “social distancing,” which means avoiding being around large groups of people; and to use good hygiene, such as frequent hand washing, to slow the spread of the disease. While these measures are essential for public health, they, as well as concerns about COVID-19, have had an effect on the economy and people’s finances. With this in mind, here are some answers to questions related to the financial and economic impact of COVID-19. 

Why Are There Empty Shelves at the Grocery Store? 

One of the first things you might have noticed is empty shelves at your local grocery store. There’s been a lot in the news and on social media about a toilet paper shortage as a result of COVID-19. However, there have also been shortages of what are referred to as “shelf-stable” foods, like pasta, rice and beans. This is because short-term demand for these products has outpaced supply, but it doesn’t mean we are running out of these products. 

 

Normally when there is more demand for a product than supply, one of two things happens. First, the price of the product will typically go up, which will cause demand for the product to go down until supply and demand become equal. In economics, this is referred to “equilibrium.” The second thing that can happen is that when conditions are such that prices either don’t increase at all or don’t increase fast enough to dampen demand, you end up with a shortage in the supply of the product. In these instances, essential products, like food or water or even toilet paper, are sometimes rationed to ensure everyone who actually needs a product can get it. 

 

What’s causing some of the shortages of products now is what is called “panic buying.” People may have plenty of toilet paper at home, but they are buying more than usual out of concern it won’t be available in the future. This is also happening with other products, such as shelf-stable and frozen foods, both of which can be stored for a long time. This is an artificial and short-term increase in demand. Grocery stores are working with product suppliers to ensure people get what they need and, in time, panic buying should decrease, resulting in store shelves being stocked again. 

Why are Some People Losing their Jobs? 

While social distancing is an important tool in fighting COVID-19, one of the downsides is that businesses that are considered “non-essential” are being temporarily closed. Since these businesses are closed, they can’t serve customers, which means the owners of these businesses aren’t receiving money to pay employees. As a result, many of these employees are losing their jobs. This is not an easy decision for business owners or employers. Having to make such choices doesn’t make them bad people. It is out of economic necessity and if not for COVID-19 people would keep their jobs. 

 

Examples of non-essential businesses include those that aren’t considered providers of critical products or services. It’s not that these businesses aren’t important, but in the current situation the risk of disease spread through customer interactions outweighs the need for them to stay open. Non-essential businesses may include furniture stores, hair salons, movie theaters, gaming stores, and clothing stores. Essential businesses, which may remain open, include grocery stores, hardware stores, pharmacies, banks, medical services, and skilled professions (such as plumbers, electricians and heating contractors). These businesses not only continue to employ people but, in some instances like grocery stores and medical services, are actively hiring more people. 

 

To help those who are losing their jobs, the government is providing an additional cash payment to many people, as well as extending unemployment benefits and delaying the requirement for these people to make government-related payments, such as on student loans and Federal income tax. Many people are also able to delay paying rent, mortgage payments and other monthly expenses for a few months to help manage through the current situation. 

Why Are Gas Prices Falling? 

Though gas prices were trending lower in late 2019, they have fallen substantially in 2020 due to COVID-19. Some predict gas prices will reach historic lows. This is also the result of supply and demand, which was discussed earlier. Since most people are practicing social distancing, this means people who would normally drive to work are either not working or are working from home. Because there are fewer people driving, there is less need to purchase gas. Since there is a greater supply of gas than there is demand, gas prices are going down in the hopes of increasing demand and, again, achieving equilibrium with the supply of gas. However, with demand being artificially depressed by social distancing and people staying home, it’s possible that even with gas prices becoming historically low, demand for gas still won’t rise significantly. 

What Is Happening with the Stock Market? 

You may have heard in the news or through social media that the U.S. stock market has “crashed.” The market has declined significantly as a result of COVID-19’s impact on the economy. However, the decline during the famous 1929 stock market crash was much worse than what we are experiencing today, and so far the current stock market decline has not been as bad as the crash that occurred during the 2008/2009 financial crisis, which signaled the coming of the Great Recession. 

When the stock market declines, investors are trying to assess the value of companies given changing economic conditions. For instance, airlines have seen a dramatic drop in passengers since the rise of COVID-19 cases, so investors may be more inclined to sell airline stocks than to buy them. Additionally, investors may be less likely to buy stocks in petroleum companies, which produce gasoline, or restaurant chains, which have had to close their dining rooms due to social distancing. At the same time, investors may be buying more stocks in health care or pharmaceutical companies or in major grocery chains. 

The decline in the stock market reflects investors’ perspective on what companies are worth given the changing landscape of consumer and business demand. The stock market will, however, eventually go up again, as it has done after every major decline in history. 

Are We Going to Experience a Recession…or Even a Depression? 

Most economic experts tend to agree that if we aren’t already in a recession, we will be. 

 

So what’s a recession? The technical definition of a recession is two consecutive quarters of negative growth in the Gross Domestic Product. In other words, if the overall economy contracts, or shrinks, for six months in a row or more, we are in a recession.

 

A recession usually means a decrease in demand for things, which results in higher unemployment, more difficulty in selling homes, and an increase in borrowing or debt to help make ends meet. It often results in more businesses closing their doors permanently and fewer jobs being available. It also typically means lower prices for goods or services. 

 

“Recession” can be a scary word, especially when people think back to the Great Recession of 2008/2009. But the fact is the U.S. economy has regularly experienced recessions throughout its history and most have not been as bad as the Great Recession. It’s too early to tell what kind of recession we will experience this time, but it’s possible it could be like the less severe recessions the U.S. has had in the past. 

 

There has also been some talk of the U.S. experiencing a depression, like the Great Depression of the 1930s. The Great Depression was the result of a lot of things, including poor government oversight of the markets and financial institutions, unnecessarily punitive tariffs, the lack of social safety nets – like unemployment insurance and Social Security – as well as a myriad of other factors that led to bank failures, massive unemployment and the near collapse of the U.S. economy. Given the reforms that have happened since the 1930s, and a more proactive economic response from government, there are a lot of things that have been put in place since the 1930s to help prevent another depression from happening.

What Is the Government Doing to Help? 

The U.S. government has been very responsive when it comes to addressing the financial and economic fallout of COVID-19. The Congress has passed legislation that is pumping $2 trillion into the economy. This funding will include sending a one-time payment to many Americans, extending unemployment benefits, providing low-interest loans to small businesses and offering government-backed loans to a variety of businesses to maintain operations through the current economic downturn. Many businesses are also turning their attention to producing masks, gloves and medical devices to help the health care system deal more effectively with COVID-19, which will also create more jobs. 

 

In addition, the Federal Reserve, which acts like a bank to banks, has reduced interest rates on the money it lends to banks. This means it will be less expensive for Americans to borrow money to support their businesses or make purchases, which will also help the economy. 

What Happens Next? 

While times are challenging now, things will eventually get better. Though we don’t know for sure when that will be, other countries around the world that had COVID-19 before the U.S. did are beginning to recover. With more people social distancing and taking proper precautions, the goal is for the United States to be in the same position in the not-too-distant future. Until then, we’re all in this together. 

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