The Price Point

As Stuyvesant students prepare to enter the outside world, understanding the economy becomes an essential skill. In today’s society, knowledge of economics provides us a foundation for navigating financial decisions, understanding the effects of public policy on the market, and making informed decisions about our own personal finances.

Recent Trust Busting:

There’s been a slew of anti-monopoly lawsuits initiated by the federal government in recent months in order to crack down on what they see as growing monopolies in critical sectors. There are currently five federal actions against Google, each of which—if successful—have the potential to open the search market to other search engines which are more careful about data protection. Multiple challenges to airline mergers have also been successful, which will hopefully drive down the price of airfare or at least prevent it from being driven up further, since the presence of more airlines increases competition. The president also signed an executive order enforcing net neutrality—preventing internet service providers like Spectrum and Verizon from changing user internet speeds based upon the type of data they’re carrying over the web—and cracked down on high fees charged by large shipping corporations. The FTC also filed an antitrust lawsuit against credit card corporation Visa, accusing them of snuffing out competitors to gain a monopoly over the US debit card industry they then used to impose billions of extra fees upon American consumers. All of these actions will hopefully drive down prices of essential goods and services at a time in which corporate greed, among other issues, has massively spiked the cost of living for all Americans.

Fed Interest Rates Raised Half a Point:

On September 17 and 18, the Federal Reserve voted to lower the Federal Interest Rate (Fed Funds Rate) by half a percentage point as part of their battle against inflation—a larger cut than many had anticipated. Promptly after, the stock market saw a temporary rise but eventually experienced a brief slide. The lowering of interest rates can help stimulate economic growth. For example, borrowing costs on mortgages and other debts have lowered in anticipation of this cut and will continue to decrease as banks compete with each other to issue more loans and stimulate the economy.

Trump's Tariffs

Donald Trump has repeatedly said that if he wins the presidency, he’ll raise tariffs on many of the largest exporters to the US, including Mexico and China. The last time the US raised tariffs on these economies, it led to a loss of 251,000 jobs in the United States. If he wins again and these tariffs are implemented, it will lead to an increase in prices for imported goods from America’s biggest trade partners at a time when they’ve already been relatively high due a combination of supply chain disruption and inflation. 

Economics Concept Of The Issue

The Federal Reserve:

The Federal Reserve (the Fed) is the United States’s central bank system, created in 1913, under the Federal Reserve Act. The main job of the Fed is to manage the policies that will help create a healthy economy in the US. Among these responsibilities are the regulation of inflation, the supervision of banks, and provision of financial services and employment. For example, the Federal Reserve establishes the Federal Funds Rate—a target range of interest rates at which banks borrow and lend to each other. Large corporate banks—such as J.P. Morgan Chase, CapitalOne, and Citibank—can borrow from the Federal Reserve and issue loans to common citizens. The Fed Funds rate is used to control monetary policy and guides the many activities in the economy, such as mortgage rates, savings rates, and personal loan and credit card interest rates.