How is COVID-19 affecting zoo animals and the zoo industry?

 by Elsa Shepard

Upon the COVID-19 pandemic, another industry that has been hit hard from this virus are zoos, and their animals, around the world. Seeing that COVID-19 caused less people to visit zoos around the globe, it has caused zoos to go into financial debt since they still had to care for their animals during the pandemic with little to no income rolling in. On top of this, the costs for animals have increased through the pandemic due to some animals testing positive for COVID-19. Now seeing all of this, here is how all these factors have affected zoos as a whole. 

According to the CDC, they say that the spread of COVID-19 virus between animals and people is possible and has occurred (The table below shows a list of animals who have tested positive for COVID-19, according to the United States Department of Agriculture), seeing as this virus originated from a bat. Although this way is a way the virus can spread, it is not common enough to make a big impact on the rise of COVID-19 cases. That does not mean, however, that this shouldn’t be worrisome since the virus can still affect the health of animals. Since no vaccine has yet been made to stop this virus, the only way that animals can be treated of the virus is through medications that help cure the symptoms of the virus. According to Wellness, it can cost anywhere from $90-$400 per annual veterinary routine; Although this routine involves diagnosing the animal, it does not include any medicines prescribed by the doctor. Alone, this cost may look small, but when you add it to every other animal in the zoo, it adds up pretty quick. 

Extending more on the financial impact that the COVID-19 pandemic has put on zoos, according to Chron, it costs anywhere from $38-$50 million dollars to run a zoo each year. Knowing this along with the facts given by USA Today that states, “Guests provide more than 90% of revenue through tickets, concessions, rides, gifts and parties”, it is clearly seen that this has become a fast growing issue for zoos. According to USA Today, it costs zoos about $55,000 a day to feed all the animals at the zoo on top of the costs that are given from the veterinarians who have check-up appointments with the animals and prescribe them with medicines as needed (which is also an additional cost). Seeing all these fees, with only about 10% of their normal income coming in, it is no wonder that zoos and their animals are struggling to get the help they need to stay healthy and open due to this extreme decrease in their income. The only reason most zoos were able to get by during the pandemic was because of money they had saved up and the low income they were receiving. 

Concluding this blog, one last impact that the lack of financial income has done was the American economy. According to the Association of Zoos and Aquariums, “Accredited zoos and aquariums contributed more than $22.5 billion to the U.S. economy”. Seeing this large financial impact, it is clearly seen that the negative financial impact that has been put on the zoo industry has not only affected them, but also the American economy. After learning about the negative impact, both financially and physically, that has been put upon zoo animals, the zoo industry, and the American economy, it is hard to know if any of these variables will recover from the burdens that the COVID-19 pandemic has put upon them. 

Works Cited 

“The Average Cost of Taking Your Pet to the Veterinarian.” Wellness Pet Food, 20 Sept. 2018, 

www.wellnesspetfood.com/our-community/wellness-blog/health-nutrition/general-care/av

erage-cost-taking-your-pet-veterinarian. 

“COVID-19 and Animals.” Centers for Disease Control and Prevention, Centers for Disease 

Control and Prevention, 24 Aug. 2020, 

www.cdc.gov/coronavirus/2019-ncov/daily-life-coping/animals.html. 

Karin Brulliard, Jennifer Oldham. “Shuttered Zoos Are Hemorrhaging Money, and They Want 

Federal Help for Endangered Species Work.” The Washington Post, WP Company, 8 

June 2020, www.washingtonpost.com/science/2020/06/08/coronavirus-zoos-aquariums/. 

Rodriguez, Olga R. “Zoos Are Reopening amid COVID-19 Pandemic, but Nearly No One Is 

Visiting.” USA Today, Gannett Satellite Information Network, 2 Aug. 2020, 

www.usatoday.com/story/travel/news/2020/08/02/zoos-return-amid-coronavirus-pandem

ic-but-no-one-visiting/5567553002/.  

Teeboom, Leon. “How to Own a Zoo.” Small Business - Chron.com, Chron.com, 10 Dec. 2018, 

smallbusiness.chron.com/own-zoo-36859.html. 

Written by Josephine Moulds, Freelance journalist. “5 Ways the Coronavirus Is Affecting 

Animals.” World Economic Forum, 7 Apr. 2020, 

www.weforum.org/agenda/2020/04/coronavirus-animals-wildlife-biodiversity-tiger-boar-pandas-zoos/. 

“Zoo and Aquarium Statistics.” AZA, www.aza.org/zoo-and-aquarium-statistics. 

Agricultural Crop Subsidies, Are There Too Many?

Agricultural Crop Subsidies, Are There Too Many?

Written by: Izzy Yuskis 

When thinking of agricultural subsidies, it is tempting to think of small Mom and Pop farms. You may be imagining subsidies are for when not enough rain comes for mom and pop to grow their strawberries, so the nice government representative pats them on the back and hands them over just enough cash to supplement what they normally would have made selling strawberries. 

Although that was a cute little story, I’m afraid it’s terribly wrong. Here's what actually happens:

Mom and Pop haven’t been able to grow as many strawberries as they hoped for during the drought, they applied for insurance subsidies, but they didn’t get much other than Disaster Aid. This is because, according to the USDA, only ⅓ of farms with revenues of less than $100,000 received federal subsidies. But don’t worry, their wheat farming neighbor who owns a mega farm, received abundant subsidies like the ¾ of farmers similar to him that make over $100,000. He is part of the 10% of rich farmers that enjoy 60% of the subsidies that come from insurance, Agricultural Risk Coverage, and Price Loss Coverage. Essentially this redistributes the wealth upward, favouring the wealthy and not helping those who need it. 

Not only are agricultural subsidies ineffective with distribution, they also subsidize farmers too much. First of all, the USDA spends over $8 billion per year, subsidizing farming insurance. Now, this doesn’t sound at all too bad until you look at the breakdown. $1.5 billion actually subsidizes 16 private insurance companies that offer insurance to farmers. So the government doesn’t just subsidize farmers, it subsidizes the private insurance companies. Additionally, $.3 billion are given out to companies to subsidize underwriting losses, which are losses to the insurance company. Although some economists may argue that it’s important to help insurance companies so they can in turn help farmers, I disagree. The whole point of insurance is that the company is taking a risk, so they are apt to choose carefully who they give insurance to. However, if the insurance company knows that they can still make some money back if they have underwriting losses, they don’t care as much who they hand out money to. This leads to some farmers getting more insurance and planting risky crops or planting normal crops in a wasteful and not innovative fashion. 

Not only are farmers more likely to get insurance, but the USDA pays for 62% of farmers’ premiums, allowing farmers to actually gain money if something goes wrong and they file a claim. The Congressional Budget Office calculated that farmers have, “received $65 billion more in claims than they have paid in premiums since 2000.” Once again, the rich benefit from insurance as well, since there are no income limits on insurance subsidies, deep pocket farm businesses can still apply for subsidies. All things considered, the insurance system doles out cash to farmers who take unnecessary risks and private insurance companies who give out policies to every other person who walks in their door.

Now at this point you may be thinking, okay yes the insurance subsidies are a little generous, but I suppose we need food to survive so maybe the extra cushion is acceptable. That makes perfect sense in theory, however, the subsidies don’t end with just insurance. Farmers are able to sprinkle in financial aid from Agricultural Risk Coverage or Price Loss Coverage in addition to insurance subsidies. ARC subsidizes farmers if revenue per acre is below the expected benchmark and PLC gives money to farmers if the national price of a crop lowers. 

Speaking of selling at a higher price, Marketing Loans and Subsidies that began during the New Deal are still valid today! Marketing Loans give farmers cash during the harvest so farmers can hold onto their crops until the price for their crops increases, at which point they sell them at higher prices. Additionally, Conservation Programs cost taxpayers $5 billion a year to subsidize farmers as an incentive to use minimal land more efficiently. This sounds ideal, but unnecessary and expensive. Without Conservation Programs I believe we could have the same or better results. If we lower the payout of subsidies to cushion farming failures, farmers will be more motivated to use their land more carefully, develop better technology, plant safe crops, and use every inch of their land rather than wastefully expanding.

Although some say farming is a huge gamble, it’s no more of a gamble than any of business and if farmers lose their bets, there is still Disaster Aid and insurance to support them. Overall, I believe we should lower agricultural subsidies considering the best market is generally a free market with little government interference. Cutting back some subsidies isn’t to harm the farmers or to over work them, instead it is to distribute the wealth evenly and protect the consumer.

What do you think?

Works Cited

Amadeo, Kimberly. “How Farm Subsidies Affect You.” The Balance, www.thebalance.com/farm-subsidies-4173885.

Edwards, Chris. “Agricultural Subsidies.” Downsizing the Federal Government, Downsizing the Federal Government, 16 Apr. 2018, www.downsizinggovernment.org/agriculture/subsidies.

Sumner, Daniel A., et al. “Agricultural Subsidy Programs.” Econlib, www.econlib.org/library/Enc/AgriculturalSubsidyPrograms.html.

Are Drug Companies Exploiting the Elasticity of Specialty Drugs?

 Are Drug Companies Exploiting the Elasticity of Specialty Drugs?

Written by: Kirsten Cutler

Modern day life provides a plethora of trials, challenges, and life-threatening experiences - one of the most prevalent being terminal and chronic illnesses. It is estimated that 7 out of 10 Americans die from chronic disease (Dartmouth Atlas of HealthCare), and often one of the only solutions to cure and/or treat these illnesses is through specialty drugs. The National Association of Specialty Pharmacy explains that “Specialty drugs are more complex than most prescription medications and are used to treat patients with serious and often life threatening conditions including cancer, hepatitis C, rheumatoid arthritis, HIV/AIDS, multiple sclerosis, cystic fibrosis, organ transplantation, human growth hormone deficiencies, hemophilia and other bleeding disorders.” Unfortunately, these life-saving drugs are typically way too expensive for a normal salary, and even medical insurance has limited coverage. Despite most people’s inability to reasonably afford these drugs, the demand remains high because of their life-preserving nature, and drug companies use this knowledge to charge extreme prices for a bigger pay day. 

According to the US National Library of Medicine and National Institutes of Health, the spending on specialty drugs is rapidly growing, despite their high costs being intensely scrutinized by lawmakers, patient activists, and the popular press. In 2014, spending on specialty drugs grew by 30% (representing 32% of total drug spending in the U.S.) while traditional drug spending increased by only 6%. Despite the steep incline in prices, it is proven over and over again that demand for specialty medications will remain consistent (and sometimes even increase). Why is this? Specialty drugs are a life-saving necessity to those who need them. They are, in economic terms, relatively inelastic. 

Price elasticity of demand is defined as “The ratio of the percent change in the quantity demanded to the percent change in the price as we move along the demand curve” (Krugman’s Economics second edition). In layman’s terms: elasticity is dependent on how much the demand for a good/service changes when the price of that good/service increases or decreases. If a change in price results in a sharp increase or decrease in demand then the product is elastic. If the demand remains consistent despite any changes in price, then it is inelastic. If a product was perfectly inelastic then the demand for that product would never change, regardless of any change in price. 

Are specialty drugs perfectly inelastic? Not quite, but any change in demand due to price is typically quite minimal - at least in the US. Other countries, especially third world countries, are not as financially fortunate, and therefore, are not always able to afford specialty drugs. In these places the drugs are far more elastic. One specific example of this elasticity is the HIV/AIDS epidemic in Africa. According to the Health Affair journal, “At the end of 2000, 25.3 million persons were infected in sub-Saharan Africa, with 3.8 million new infections in 2000.” These skyrocketing numbers could be largely attributed to the lack of affordability of a drug that is widely available in western nations. Finally in 2017, after a new pricing deal was struck between the UN, African nation governments such as South Africa and Kenya, the pharmaceutical industry, and the US President’s Emergency Plan for Aids Relief (PEPFAR), the price of the HIV/AIDS treatment drug was lowered from $1000 to $75 a year in over 90 low to middle income countries. This major change in price indicates that the drug is elastic in these countries, and in order to increase demand there had to be a decrease in price. Comparatively, the cost of the same specialty drug in the US is $39,000 a year. This extreme price offsets the high cost of producing the drug, while also allowing the drug companies to make a profit. The higher average incomes in the US - as well as aid for those with health insurance - allows people to afford the $39,000, and it is why the cost is so much more inelastic compared to lower income countries. People can pay for the treatment, and so they will, which is the perfect opportunity for drug companies to raise prices unnecessarily in order to bring in a larger total revenue. When this happens it is up to the government to step in and place price ceilings on the drugs - just as they did with the HIV/AIDS treatment in Africa - so that a monetary value cannot be placed above the worth of human lives. 

These high costs for treatments can become major financial burdens on individuals and families, especially because often a disease, such as HIV/AIDS or cancer, can impair people’s ability to work normal hours, or at all. Determining what is a fair price for a drug is a controversial topic and the responses vary depending on what role people play in the drug producing or consuming process. Currently, different patients pay different prices for specialty drugs depending on the specifics of their health insurance plans - or whether they have one at all. Even those who have health insurance often max out their plans when on specialty drugs, so the residual thousands of dollars is forced to be taken out of pocket. Drug manufacturers argue their high prices by explaining the high costs of researching and developing new drugs. It can take years to find potential test candidates and perform intricate tests that are highly expensive. However, there is much speculation by individuals that drug companies and intermediaries in the supply chain are exploiting the inelasticity of the drugs, as well as the confusing complexity of the system by charging high prices for drugs without justification. 

One specific example of this exploitation was cited in a journal published by the US National Library of Medicine and National Institutes of Health. They discussed the case of the leukemia drug imatinib (Gleevec). The drug was released into the US in 2001 at the initial price of $4,540 per month of treatment. There was a very positive response to the drug and its effects, and by 2016 it cost $8,500 per month in the United States, but cost $4,500 and $3,300 per month in Germany and France, respectively. This increase in price occurred despite two major factors that would usually bring the price down. “First, because leukemia patients are living longer due to the drug's effectiveness and because new indications for the drug have been approved, the population treated with the drug has expanded, which has increased sales volume of the drug. Second, other drugs that target the same abnormal protein have entered the market. For most types of non-medical products, such a combination would result in more options and lower costs and prices.” Most of the other cancer drugs released into the market are not as effective as Gleevec in extending the lives of cancer patients, yet have similarly high prices, so with no competition the drug company was able to steadily increase their price with no relevant fluctuation in demand. Drug companies, such as this one, should be regulated so that their prices cannot majorly increase after the initial research costs are eliminated and the drug is put on the market. Extreme changes in price, even if they are gradual, are unfair to the consumers and take advantage of the inelasticity of the drugs - creating an unequal market. The government can protect the rights and lives of US citizens by monitoring the prices of specialty drugs, and placing price limits when necessary for the greater good. 

Works Cited

Blue Cross Blue Shield Blue Care Network, of Michagen. “What Do I Need to Know about Specialty Drugs?” What Are Specialty Drugs? | Pharmacy, 2020, www.bcbsm.com/index/health-insurance-help/faqs/plan-types/pharmacy/what-are-specialty-drugs.html. 

Dartmouth, Atlas Project. “End of Life Care.” Dartmouth Atlas of Health Care, 18 Aug. 2020, www.dartmouthatlas.org/interactive-apps/end-of-life-care/. 

Goldman, Dana P, et al. “The Value of Specialty Oncology Drugs.” Health Services Research, Blackwell Science Inc, Feb. 2010, www.ncbi.nlm.nih.gov/pmc/articles/PMC2813440/. 

Gow, Jeff. “The HIV/AIDS Epidemic In Africa: Implications For U.S. Policy.” The Independent, Independent Digital News and Media, 22 Sept. 2017, www.independent.co.uk/news/world/africa-hiv-aids-drugs-treatment-deal-under-threat-us-budget-cuts-a7960391.html. 

Jung, Jeah Kyoungrae, et al. “The Price Elasticity of Specialty Drug Use: Evidence from Cancer Patients in Medicare Part D.” Forum for Health Economics & Policy, U.S. National Library of Medicine, Dec. 2017, www.ncbi.nlm.nih.gov/pmc/articles/PMC5877476/. 

National Association of Specialty Pharmacy. “NASP Definitions of Specialty Pharmacy and Specialty Medications.” NASP, 24 Feb. 2016, naspnet.org/wp-content/uploads/2017/02/NASP-Defintions-final-2.16.pdf. 

Rosenberg, Tina. “H.I.V. Drugs Cost $75 in Africa, $39,000 in the U.S. Does It Matter?” The New York Times, The New York Times, 18 Sept. 2018, www.nytimes.com/2018/09/18/opinion/pricing-hiv-drugs-america.html. 

Sciences, National Academies of, et al. “The Affordability Conundrum.” Making Medicines Affordable: A National Imperative., U.S. National Library of Medicine, 30 Nov. 2017, www.ncbi.nlm.nih.gov/books/NBK493099/. 

Student Loan Debt

 by Valerie Wallace

As we are looking at the next chapter in our lives, there are a lot different expenses to pay for. There is college, housing, food, entertainment, and many more things to spend money on. The main expense would be college alone, including tuition and fees. According to data reported to U.S. News in an annual survey, the average cost of tuition and fees for the 2020–2021 school year was $41,411 at private colleges, $11,171 for state residents at public colleges, and $26,809 for out-of-state students at state schools (usnews.com). This is just the amount of money spent on 1 year of college, and there can be up to 16 years if one wanted to complete med school. Granted, the costs would lower as students earned scholarships and other fees that the school would cover for financial aid; however, college is still an immense expense for one person. Since college students don’t have this kind of ‘pocket money,’ they take out a loan from a bank. According to Kimberly Porter, the CEO, and president of Microcredit Summit, “Student loan debt in 2020 is now $1.56 trillion in the United States, with borrowers on average owing $37,172 in debt. Graduates of the most recent class of students leave college with $29,200 in student loans” (MicrocreditSummit.org). This loan can take years upon years to pay back, and the main hassle is that you have to pay back the loan plus interest on the loan. Therefore, there are many different ways to pay back this debt. 

Student loan debt remains the second-highest debt cost, just behind mortgage loans. Paying off student loans is so extremely hard because of the interest that builds up, specifically compound interest. The interest is different based upon what type of loan you take out and where you take it out from. There are many different kinds of loans that you can take out based upon if you are going into undergraduate or graduate school, if you need financial aid or not, or even if you have an adverse credit history or not. At the end of the day, there are 2 main types of loans: federal student loans, and private student loans. Every type of loan has some type of interest rate. According to Madison Miller, a Research Analyst who focused on student loans and personal loans, “The 2019-2020 federal student loan interest rates are currently 4.53% for undergraduate loans, 6.08% for unsubsidized graduate loans and 7.08% for direct PLUS loans” (valuepenguin.com). This means that each year, for undergraduate loans, 4.53% of the loan that is not paid back, will be added as interest at the end of the year. Typically, the interest will be charged per month so it would be 4.53/12 to get .378% interest each month. This money can add up fast if the student loans don’t start to get paid off. For example, if you were to take the average student loan debt of $29,200 and the average interest rate of undergraduate students of 4.53% each year, $1,322.76 would be added to your debt each year just off of interest alone. After the first year of $1,322.76 is added to your student debt, the next year, 4.53% of your new total would be charged for interest since it is compounded interest. That would be $1,382.68 of interest alone added to your student debt. If you were to wait 5 years to start paying off your student loans, that would leave you with $36,512.31 in student debt after 5 years of interest is added. That is only 5 years. The average amount of time it takes to pay off student loans is 21.1 years (cnbs.com). This shows how you can not just pay off your student debt in a couple of years, it takes many years. A key is to start paying off your debt early so that you don’t end up paying double your total student loans because of the interest that has built up. If you start paying off your student debt, the interest will still be charged at the same rate, but it will be charged towards a lower amount. As more and more of the debt gets paid off, the less total interest will be added to the debt. To help keep the total amount of interest added low, students should start to pay it off as early as possible.

There are many different circumstances to paying off student loans based upon what your income might be. Jimmy Karnezis, a conductor of clinical research at the University of Athens Medical School, says that a good rule of thumb is to put 10-20% of your savings towards student loans a month (credible.com). Although this could be very challenging for students fresh out of college who are living paycheck to paycheck, it would be extremely helpful to them for the future. The 10-20% could also vary as students start to get older and the percent could raise as the students make more money. The percentage could start as 5% of your income towards student loans right out of college and grow 1% each year until the loans are paid off. As long as a good basis is met and the loans are starting to get paid off as soon as possible, the amount of interest will not be as high. Some people are ages 62+ who still have student loans to pay off. If you look at the graph, the amount of student debt goes down as people age because they pay it off, but there is still an abundant amount of debt of people ages 62+. This shows how important it is to start paying off student debt early because nobody wants to still have student debt when they should be retiring. Student debt may be the second-highest debt rate in America, but for each person, it can be paid off in a reasonable amount of time if started early and a good percent of income is put towards paying it off each month. 

Works Cited

Hess, Abigail J. “College Grads Expect to Pay off Student Debt in 6 Years-This Is How Long It Will Actually Take.” College Grads Expect to Pay off Student Debt in 6 Years—This Is How Long It Will Actually Take, CNBC, 19 June 2019, www.cnbc.com/2019/05/23/cengage-how-long-it-takes-college-grads-to-pay-off-student-debt.html. 

Karnezis, Jimmy. How Much Income Should Go Towards Repaying Student Loans?, Credible, 28 Mar. 2020, www.credible.com/blog/personal-finance/how-much-income-should-go-towards-repaying-student-loans/. 

Miller, Madison. Student Loan Interest Rates 2019: Your Guide to Understanding the Numbers, Value Penguin, 14 June 2020, www.valuepenguin.com/student-loans/student-loan-interest-rates. 

Porter, Kimberly. “Student Loan Debt Statistics - Updated September 2020 - Average Debt Amounts.” Microcredit Summit, 18 Aug. 2020, www.microcreditsummit.org/student-loan-debt-statistics/. 

Powell, Farran. “What You Need to Know About College Tuition Costs.” U.S. News & World Report, U.S. News & World Report, 17 Sept. 2020, www.usnews.com/education/best-colleges/paying-for-college/articles/what-you-need-to-know-about-college-tuition-costs. 

“What Types of Federal Student Loans Are Available?” Federal Student Aid, American Mind, 2019, studentaid.gov/understand-aid/types/loans. 

Credit and Debit Cards: Which one is right for you?

 by Maya Momcilovic

Credit cards and debit cards are not the only way to spend money however, it is one of the easiest ways to make in-person and online payments. The difficult part about credit and debit cards is deciding which one is best for you. Both cards have a 16-digit number, pin, and expiration date but outside of the visual aspects, credit and debit cards are much different and are suitable for different people. 

The first main difference between credit and debit cards is credit cards offer more protection than debit cards do. According to Investopidia.com credit cards have a limit to how much is spent after the card reaches a certain amount, “As long as the customer reports the loss or theft in a timely manner, their maximum liability for purchases made after the card disappeared is $50. The Electronic Fund Transfer Act gives debit card customers the same protection from loss or theft—but only if the customer reports it within 48 hours of discovery. After 48 hours, the card user's liability rises to $500; after 60 days, there is no limit.” Credit cards are safer for users as they offer protection for a longer amount of time than debit cards. A credit card may be better for you if you are basing it off of protection because you can catch theft easily. 

Along with protection, credit cards differ from debit cards as credit cards can help you boost a credit score with fees whereas debit cards don’t have any fees but there is also no credit score. According to AARP.org debit cards don’t charge fees but credit card companies can give you points from airlines, “While many credit cards charge annual fees, debit cards usually don’t. And, of course, the credit card annual fees are charged automatically to your card, making them far less noticeable, and so you just keep paying, year after year.” Credit cards can give cashback, airline points, and rewards at stores which can be great for the future whereas debit cards don’t need the interest to be paid and are great for limited purchases. 

Now you may be wondering, which one is right for me? Both credit cards and are different in their ways and have perks of their own. Debit cards would be better for teenagers as it has a limit on the amount of money being spent. Once you are past 18 years old, a credit card can be helpful as you can get points through different companies to spend money. Getting a credit card early is important as it can help boost your credit score and help you save money in the future. In conclusion, credit cards are different from debit cards even though they look the same. Both cards can help you and there isn’t a right or wrong answer. What kind of card do you have and which one are you planning on getting for the future? 

Works Cited

CardRatings.com. “How Credit Cards Work.” Www.cardratings.com, www.cardratings.com/how-credit-cards-work.

Cussen, Mark P. “What's the Difference Between Credit Cards and Debit Cards?” Investopedia, Investopedia, 28 Aug. 2020, www.investopedia.com/articles/personal-finance/050214/credit-vs-debit-cards-which-better.asp.

“Discover Debit Cards vs. Credits Cards.” Discover, 19 Feb. 2020, www.discover.com/credit-cards/resources/the-difference-between-credit-and-debit-cards/.

Roth, Allan. “Should You Use a Credit Card or Debit Card.” AARP, 29 Sept. 2017, www.aarp.org/money/credit-loans-debt/info-2017/which-is-better-debit-or-credit-card-fd.html.

Saving Money: What is it and why is it important?

 by Anika Woelffer 

As you get older, putting money away for your future continuously becomes more important. Although it's far ways away, the faster you can start saving money and putting it away, the more money you will have in the future. Saving is the process of putting money into a secure bank account that is unspent or used. There are many different types of accounts you can open up, but one isn't necessarily better than the other. When saving, I'm not only talking about retirement plans, but as well as vacations, money for your grandchildren, house payments, and debt. If you save early and start investing at a young age, your chances of having millions of dollars in your savings account increase drastically once you retire. Not only is it important to save, but it’s also a necessity. Over time the money will grow through interest, the interest isn't a large percent (normally 0.06%), but the longer the money sits there, the more you will have when you decide to withdraw it. 

According to the graph from the website Money.com, it is easily identifiable that 1 of 3 Americans don't have any savings for retirement. This percent is huge when you realize the importance of saving. Not only does savings guarantee that you will be financially stable in the future, but it also can impact future generations of your family. No matter what current state of life you are in, saving money will always be beneficial. It is better to start early, so in the end, you will have more money put away but any contribution will put you steps ahead of a ⅓ of the population. 

Saving money can be easy, and opening a savings account can be done practically anywhere. It's even easier nowadays because you can set up an account online! From the website Nerdwallet, it states, “ Using a savings account creates some distance between everyday spending money, kept in your checking account, and cash that's meant for a later date, like an emergency or a vacation.” Not only do plans motivate someone to save, but it will also guarantee that you will have money put away in case of emergencies. If you don't like the idea of a savings account there are alternative ways. First of all, there is a certificate of deposit, this is a timed deposit, but you will earn more interest in the end. Unlike a traditional savings account, the interest for a CD can go up to 3% (depends on the bank) while a savings account is 0.06%. The CD works similarly to a savings account, but the main difference is you can't take out the money until your “contract” is up, and there is an increased interest rate (Investopedia.com). Another way to save is a money market account. The purpose of this account is to be a “happy medium” between checking accounts and bonds. They have limits on withdrawals as well as higher minimum balances, plus they have higher interest rates at 2% (Bankrate). Now, one may be wondering “What account works best for me?” This is 100% based on your needs, if you are putting a large amount of money away for a long period of time, the CD would work best. If you want to access money in a faster amount of time and aren't worried about it growing much, then a savings account would work best. Lastly, the graph below shows the pros and cons of comparing a traditional savings account, CD, and MMA. 

In conclusion, not only is saving important, it is a necessity. It will provide a better and stable future the early you start. As mentioned before, saving is as easy as going to the bank and opening an account. Understandably, people might struggle with saving, but every little bit helps. What method do you think you would do? What are some reasons people might struggle to save? 

Works Cited

“1 In 3 Americans Has Saved $0 for Retirement.” Money, money.com/retirement-savings-survey/.

“5 Best Money Market Account Rates for September 2020.” Bankrate, www.bankrate.com/banking/money-market/rates/.

“How To Save Money Fast: 100 Ways to Save Money.” The Simple Dollar, 6 Aug. 2020, www.thesimpledollar.com/save-money/little-steps-100-great-tips-for-saving-money-for-those-just-getting-started/.

Karl, Sabrina. “What Is a Certificate of Deposit (CD)?” Investopedia, Investopedia, 29 Aug. 2020, www.investopedia.com/terms/c/certificateofdeposit.asp.

Economic Effects of Pandemic Lead Housing Boom in the United States

 Economic Effects of Pandemic Lead Housing Boom in the United States

Written by: Rithwik Mathur 

The Covid-19 pandemic has affected economic systems worldwide in ways that couldn’t have been imagined. In more specificity, there has been a massive change in the real estate market this year. This “housing boom” brings up many concerns but at the same time has some positives to it. Economists around the country have all sorts of predictions of the real estate market in the months and years to come, however, this is what we know about this housing boom and how it has impacted the United States economy as of now. 

A housing boom is when the prices of houses rise very quickly. This typically happens when there is an imbalance in supply and demand. There is too much money in the market and not enough properties. To simply put it the demand outweighs the supply and there is a scarcity in the market. By no means is this a small increase in prices, a housing boom is a VERY significant change in prices.

As you can see based on the graph (Forbes) above, there have been significant changes in the housing market in the past 20 years. The current housing market is experiencing the same boom that was experienced in the early 2000’s. In reality, the current boom has been happening since 2014, however, it has a greater impact and significance amongst the population right now. 

Homebuyers are having to pay great amounts of money for properties due to this boom. Priorities of the population have changed tremendously in the past few months. Due to the pandemic people are in desperate need of more space. Additional space has become top priority. This demand is at the moment nearly inelastic. There are not as many options for families trying to find more space and they are forced to pay prices that are much higher than what they were at the end of 2019.

There are both pros and cons to this boom. Higher house prices typically encourage consumer spending and lead to higher economic growth. This is caused by something known as the “wealth effect”. Which is a behavioral economic theory which says that people spend more as the value of what they are buying increases. Due to the pandemic houses and space is more valuable, thus, more spending. On the other hand, these same rising prices reduce effective living standards for those that don’t have a house which is often younger people.

Shown above is a prediction by experts from dotloop.com , a real estate agency. Naturally, the question on everyone’s mind is “When will this market crash?” Many experts don’t see this boom crashing anytime soon. The current purchase application data is maintaining itself flat to positive on a monthly basis. This means that prices have gone up or have stayed the same at the least. However, at the same time the pandemic is causing some sellers to take their homes off the market, during this time which has already been characterized as a housing shortage. The future is unknown and can’t be guaranteed in such a time, there could be a recession if demand no longer exists, nonetheless, analysis of the current market suggests that this market won’t crash anytime soon. 

Works Cited

Colombo, Jesse. “Why U.S. Housing Bubble 2.0 Is About To Burst.” Forbes, Forbes Magazine, 1 Apr. 2020, www.forbes.com/sites/jessecolombo/2020/03/31/why-us-housing-bubble-20-is-about-to-burst/#624291966b76.

“It's Official: The U.S. Won't See a Housing Bubble Crash Anytime Soon.” HousingWire, 22 July 2020, www.housingwire.com/articles/its-official-the-u-s-wont-see-a-housing-bubble-crash-anytime-soon/.

Pettinger, Tejvan, and Elisa Robinson. “How the Housing Market Affects the Economy.” Economics Help, 12 Dec. 2019, www.economicshelp.org/blog/21636/housing/how-the-housing-market-affects-the-economy/#:~:text=In summary:,can contribute to economic recession).

Staff, ALM. “COVID-19 Creates Housing Boom.” GlobeSt, 7 Aug. 2020, www.globest.com/2020/08/07/covid-19-creates-housing-boom/?slreturn=20200822132350#:~:text=COVID-19 continues to stir,upset the plans of homeowners.&text=“Somewhat counterintuitively, the coronavirus-,real estate brokerage company Redfin.

Tamny, John. “The 2020 Housing Boom Is A Perilous Economic Signal.” Forbes, Forbes Magazine, 19 Sept. 2020, www.forbes.com/sites/johntamny/2020/09/20/the-2020-housing-boom-is-a-perilous-economic-signal/#5c38a9b52952.

How did COVID-19 affect the NBA financially?

 How did COVID-19 affect the NBA financially?

By: Evan Murphy

With the unpredictable appearance and growth of COVID-19 across the globe and especially in the United States, many businesses, restaurants, and stores had to shut down for a while in order to ensure people’s safety. But how did COVID-19 affect the sports world, and more specifically, basketball? COVID-19 hit the U.S. hard in the middle of basketball season, forcing the NBA to shut down the rest of the season and quarantine along with the rest of the country. But how did this affect the revenue for the NBA?

In the graph above, you can see that the estimated revenue the NBA missed out on from the regular season ALONE was near an estimated $650 million dollars according to statista.com. With the gate revenues making up about $400 million, and non ticket revenues making up the other $200 million dollars. With over 259 games left to be played across the league, the NBA took a major financial hit by having to cancel the NBA season due to COVID-19. 

Not only does the NBA miss out on a lot of revenue, but as a result, so do the players. Every season, the NBA comes up with a salary cap for the season - or the maximum amount of money a team can spend on salaries that season. Because of COVID-19 hitting the US, the NBA lost tons of money, as I mentioned before. In fact, according to yucommentator.org, it is estimated that the NBA could miss out on up to $1 billion dollars including both the regular season and playoffs. If this is true, the salary caps for each NBA team will be lowered from the previous year. If the NBA still manages to bring in $6 billion dollars of revenue, the cap space for each NBA team will still be $7 million less than last year, and $14 million less than it was projected prior to COVID-19. This means that the players looking for new contracts this offseason or players who are free agents will likely be in for smaller deals than anticipated, and may not be inclined to sign as long of a deal since it won’t be worth as much money. 

    Recently though, the NBA restarted in what they call the “bubble” where they quarantine as a league in Walt Disney Orlando’s resort (as pictured above), hosting all league members including players, coaches, and other staff and league officials. The NBA bubble has given the NBA the chance to continue their season, and they are currently in the conference finals of the playoffs. But without fans, the NBA is missing out on gate revenue, which makes up for about 40% of their revenue according to marketplace.org. On top of this, the NBA announced that their cost to operate the bubble is roughly $150 million dollars. The NBA is still missing out on tons of revenue by having the bubble instead of the normal playoffs, but at least the NBA will still make money now off of TV revenue. Yet despite everyone being stuck at home, NBA ratings are actually still down, as some major teams like the Bulls, Knicks, and Warriors weren’t even invited to the bubble. 

In conclusion, the NBA has been drastically affected by COVID-19 financially. The NBA has missed out on lots of revenue from fans, TV revenue from the regular season, lost some cap space, and had to spend lots of money on the bubble. Hopefully in the near future, the COVID-19 pandemic will slow down and the NBA will be able to completely re-open by next season. But if they don’t, be prepared for the NBA to experience another big financial burden. 

Works Cited

“COVID 19's Impact on NBA Salaries.” The Commentator, 7 Sept. 2020, 

yucommentator.org/2020/09/covid-19s-impact-on-nba-salaries/.

Gough, Christina. “NBA Revenue Loss Due to Coronavirus 2020.” Statista, 18 June 2020, 

www.statista.com/statistics/1104004/coronavirus-revenue-loss-nba/.

“NBA ‘Bubble’ a Success, but How Are the League's Finances?” Marketplace, 14 Aug. 2020, 

www.marketplace.org/2020/08/14/nba-bubble-covid-19-playoffs-league-costs-disney-world-orlando-tv-contracts-ratings/.

Pincus, Eric. “How Much Money Will NBA Players Lose Due to Coronavirus Pandemic?” Bleacher Report, 

Bleacher Report, 2 Apr. 2020, 

bleacherreport.com/articles/2884678-how-much-money-will-nba-players-will-lose-due-to-coronavirus-pandemic.

2021 Formula One Budget Cap

 Audrey Pangerc

Mr. Reuter

A2 Econ 

September 18, 2020

2021 Formula One Budget Cap

At one of the highest levels of motorsport racing, Formula One (F1) has been a leader in  innovation, specifically for the speed and aerodynamics of cars. However, for the 2021 season, the FIA (Fédération Internationale de l'Automobile) announced a new budget cap at $145 million dollars. The budget cap was meant to provide a more equal playing field for the 10 F1 teams, but overall the cap will cause a loss in innovation and safety in the sport, and massive layoffs from larger teams. While smaller racing teams, such as Williams Racing are reliant on the budget cap to stay afloat, larger racing teams, such as Mercedes will have to severely decrease their spending to be within the cap. Ultimately, a budget cap will diminish the spirit of the sport, as teams won’t be able to have the freedom to innovate on such a large scale.

The purpose of the budget cap was to create a more equal playing field, and promote more competition among racing teams. The chart on the right shows the 2019 budgets of the 10 F1 teams, Mercedes having the largest budget at $484 million, and Williams Racing having the lowest budget at $132 million. Currently, the teams’ budgets are predictive of their standings and are linked to the teams’ net worth. While Mercedes dominates the sport, Williams Racing can never seem to make it into the points. Creating a budget cap will allow for smaller teams, such as Williams, Hass, and Alpha Romeo to compete against teams like Mercedes, but at the cost of innovation. Christian Horner, the Principal of Red Bull Racing stated that, “The fact that we can carry over chassis and gearbox, that makes life a little more palatable but inevitably with a reduction, there will be the necessity to reorganise our teams accordingly.” In order to save money, and stay within the new budget, teams are having to rely on old designs, which will limit growth and innovation within the sport, lower the teams’ net worth, and overall diminish the spirit of Formula One. 

In addition to relying on old parts to save money, large teams will be experiencing massive layoffs as a result of the new budget cap. Even after the Coronavirus pandemic, F1 teams will have to pare down their staff even more due to the new budget cuts. The Race, a digital motorsport channel, stated that, “McLaren announced this week the whole company will undergo a major restructure that results in 1,200 redundancies, including around 70 job losses for the F1 team, and cited the budget cap and the impact of the global coronavirus crisis as the reason for this.” And with a smaller staff due to the budget cap, creativity within the sport will be limited. Additionally, outside of the sport, losses and redundancies in Formula One will create a temporary surplus of automotive engineers looking for jobs, making the job market more competitive. Job losses are never good for the overall economy of a country, so by creating a budget cap that limits the teams’ staff, not only will the innovation in sport be limited, but also the lives of those losing their jobs, and the overall economies of their home countries.

Furthermore, the safety of the sport will be compromised. With scarcity of staff and resources, F1 teams won’t be able to come up with new safety measures the way they used to. For example, the F1 Halo, as pictured in the right, was originally designed by a team of engineers at Mercedes, and is now implemented in all F1 cars as a safety requirement by the FIA. Despite only being implemented in 2015, the Halo has saved countless lives in F1, most recently in the Tuscan Grand Prix, saving the life of Mclaren driver, Carlos Sainz, in a crash that wiped out 4 cars on the straight. With a limited budget, Mercedes and other leading teams won’t be able to develop safety measures at the rate they previously could. 

Overall, the opportunity cost of a budget cap outweighs the benefits. Job losses, decrease in innovation, and compromised safety are too important to be overlooked. Large teams should be able to rely on their hard earned revenue to reinvest into their team to build a legacy. Creating a budget cap may temporarily create an equal playing field, but in the long run, the innovation in the sport will slow down drastically, leaving behind the true spirit of competition. 

Works Cited

F1. “How the Teams Are Developing the Halo.” Tech Insight, Formula 1, 4 Feb. 2019, www.formula1.com/en/latest/article.tech-insight-how-the-teams-are-developing-the-halo.5zjzo4O4oM0k0WeUoOWqac.html. 

George, Dhruv. “Amid Budget Cap for 2021, How Much Is the Current Budget of Teams in 2019?” The Fans Perspective, EssentiallySports, 1 Nov. 2019, www.essentiallysports.com/what-are-the-budgets-for-all-10-formula-one-teams-2019/. 

Mitchell, Scott. “Top Teams Hoping to Redeploy Staff They Must Cut from F1.” The Race, Formula 1, 27 May 2020, the-race.com/formula-1/top-teams-hoping-to-redeploy-staff-they-must-cut-from-f1/. 

The Economic Impact of the Pac-12 and Big Ten Postponing Football Seasons

 Grace Lochner

Mr. Reuter

A2 Economics

September 18th, 2020

The Economic Impact of the Pac-12 and Big Ten Postponing Football Seasons

Whether you’re a season ticket holder, college student, student athlete, or weekend couch warrior, a major aspect of the fall season is college sports such as football, especially in the Pac-12 and Big Ten schools including University of Wisconsin, Madison, University of Minnesota, University of Iowa, University of Arizona, Arizona State University, etc. This year, though, with the Coronavirus Pandemic, these institutions have pulled the plug on one of their largest sources of revenue, which is predicted to, and already has, make/made explosive economic impacts. 

Andrew Brandt, the Business and Legal Analyst for the NFL and columnist in Sports Illustrated, and former VP of the Green Bay Packers, says that when he played for the Packers, they calculated over $10 million per game weekend, which is calculated to be roughly $14 million now. After researching similar regions within the Big Ten Conference, he found that the revenues were all very high:

Penn State: $130 million per season

Michigan: $112 million per season

Wisconsin Madison: $16 million per season

These yearly collections play a large role into the funding of the school and athletic program, which will produce positive externalities such as more students being drawn to attend the schools, who’s tuition will also bring in revenue, as well as more funding going into the education of those students, producing more successful people in the workplace post-college. The cancellation of these seasons, though, will have negative externalities such as surrounding hotels losing business from those who would have been travelling in town for game days, restaurants in the towns not collecting half of the revenue had students grabbed a bite to eat before or after the game, and those who report on the sidelines or do pre/post game talks not having games to discuss or report. 

Dave Brown is a teaching professor of economics at Penn State and he says, “I was a little surprised by the cancellation of football. At the very least I thought they would try to have some sort of a season with limited fans… or maybe have a season with no fans just to still try to get some sort of TV network revenue.” Brown said that Penn State's football revenue “pretty much subsidizes” every sport at Penn State except for men’s hockey and basketball. The question remains then, if the athletic department can hold any other sport financially without the major support that football games ring in. Yet another negative externality of cancelling a single fall sport.

 

The economic downfalls that would come as a result of postponing or cancelling college football are undeniable as the revenue brought in is incomparable to any other sport. Yet aside from this, the players themselves are using their voices to try to continue forth with a fall season, simply due to the love of the game, as well as logistics that go with drafting for the NFL or redshirting a season. Trevor Lawrence, the projected number one draft out of Clemson University, who could sit the season out and still remain the top pick, is one of the loudest voices, who is joining the movement in attempting to revive an almost dead season. Not only do college towns and universities need revenue in order to provide quality education an athletic programs, trainings, and experiences, these players who dedicate their lives to performing at their best need the opportunity to put to showcase their work and provide their service of entertainment, also known as college football, that is a staple in the fall season and would be extremely detrimental to postpone or cancel all together. 

Works Cited

“ABOUT ANDREW.” Andrew Brandt, 1 Jan. 1982, www.andrew-brandt.com/about-andrew/.

Brandt, Andrew. “Football's Economic Impact on College Towns, Players and the NFL.” Sports Illustrated, 18 Aug. 2020, www.si.com/nfl/2020/08/18/economic-fallout-nfl-impact-of-college-football-season-cancellations.

Forde, Ross Dellenger and Pat. “'We're All Effed. There's No Other Way to Look at This'.” Sports Illustrated, 8 Apr. 2020, www.si.com/college/2020/04/08/college-football-future-2020-ncaa-coronavirus.

Lawrence, Trevor. “People Are at Just as Much, If Not More Risk, If We Don't Play. Players Will All Be Sent Home to Their Own Communities Where Social Distancing Is Highly Unlikely and Medical Care and Expenses Will Be Placed on the Families If They Were to Contract covid19 (1).” Twitter, Twitter, 9 Aug. 2020, twitter.com/Trevorlawrencee/status/1292599402784325632.

Mortgage Rates: All Time Historical Low

 By Maddie Wilkey

    Recently mortgage rates in the United States have reached an all time low, causing many families to refinance their mortgages. The Coronavirus pandemic plays a significant role in the Federal Reserve’s decision to lower rates. The Fed chose to lower  rates in order to protect the economy from anymore damage due to the pandemic. These lowered rates create a perfect opportunity for homeowners to refinance their mortgages for their own benefit. 

The Feds started lowering rates on March 3, 2020 (Lewis) and it was recorded that 30-year fixed mortgage rates were at 3.09% (Wichter). The chart shown shows 30-year mortgage rates from 1972 to February of 2020. It is stated that the 2020 low in February was recorded at 3.29%, but since then the mortgage rates have continued to decline becoming more beneficial for families who struggle with their finances. The last recorded historically low mortgage rate was in 2012 at 3.31% which is a 0.22% difference from our current 2020 mortgage rate. This chart also shows the highest mortgage rate in time which was 16.63% in 1981 during the recession in the United States, but once the recession ended the rates had a steady decline which helped to restore the economy. 

    Those who have mortgage loans and are choosing to refinance their homes are taking smart actions to saving more money and making an investment that will benefit them in the future. One example would be an average house in Pewaukee, which costs around $350,000. Say this house has a $70,000 down payment (20%) for a 30-year mortgage loan. With the current interest rate applied to this house after it is refinanced, the monthly payment is reduced down to $1,829 (Bankrate) for the house compared to the 2019 average interest rate of 3.9% when the monthly payment for the same house would be $1,955. The decrease in mortgage rates has helped to improve many families' financial situations since the struggle of our economy due to the Coronavirus pandemic. Families should take the opportunity to save their money by refinancing their mortgages.

Works Cited

Lewis, Holden, “What the New Coronavirus Means for Your Home Loan and Mortgage 

Rates.” NerdWallet, 3 Aug. 2020, 

www.nerdwallet.com/blog/mortgages/what-coronavirus-means-for-your-home-loan-and-m

ortgage-rates/. 

Miller, Peter. “How Low Can We Go? 30-Year Mortgage Rates Chart Tells the Story Mortgage 

Rates, Mortgage News and Strategy : The Mortgage Reports.” Mortgage Rates, Mortgage 

News and Strategy : The Mortgage Reports, 2 Sept. 2020, 

themortgagereports.com/61853/30-year-mortgage-rates-chart. 

Wichter, Zach. “Mortgage And Real Estate News This Week.” Bankrate, Bankrate.com, 19 Sept. 

2020, www.bankrate.com/mortgages/news-this-week-september-19/. 

Good debt vs Bad Debt

By John Patino

What comes to mind when you hear debt? College loans? Credit Card Payments Due? Mortgages? Losing Money? 

There are two different types of debt one is good and one is bad. Let's talk about it. It is important to distinguish the differences between these two to help better understand what to avoid and utilize in different scenarios. First let's start with good debt, good debt is whenever it helps you add another zero to your net worth or if it has future value. In other words using money to make more money is good debt. Some examples that fall under the category of good debt is taking out a mortgage. Everyone at some point in their lives is going to settle down and find a place to call their home sweet home. Putting your money on a house is a good use of debt because it will not only put a roof over your head but it will also gain you money by home appreciation depending on the location and all the surrounding factors of the community. Next example of good debt is using student loans. Student loans can be beneficial because it allows you to get help for paying the education for the career you are trying to pursue. This is an example of a good use of debt because though it doesn’t provide you with value right away it will grow in the future and depending on the career path you choose it can be rewarding or take you there longer. Now that we got good debt out of the way let's move on to bad debt. What is bad debt? Bad debt is the exact opposite of good debt. While good debt is using money to make more money, bad debt is using money to lose more money. The first example for bad debt is credit cards. According to lexingtonlaw.com “In quarter four of 2018, America owed a total of $870 billion in credit card debt alone — a 5 percent increase from 2017. When other sources of revolving consumer credit are factored in, Americans owe a total of $1.057 trillion as of March of 2019. The outstanding revolving consumer credit debt is growing at a staggering rate and has surpassed revolving credit owed during the 2008 Great Recession”. Bottom line is that having credit card debt is bad because it will snowball into more and more liabilities and no returns for your money so make sure to pay the balance full when it is due. The second example for debt is automobile loans. Cars depreciate as soon as you drive them off the lot. Unless they are a rare ferrari, a limited exotic car, or a collectors piece most cars will lose their value overtime due to wear and tear. According to car fax.com “the value of a new vehicle can drop by more than 20 percent after the first 12 months of ownership. Then, for the next four years, you can expect your car to lose roughly 10 percent of its value annually”. In conclusion knowing the differences between the different types of debt can help you better be prepared for when you are in one of these situations and be financially sound. 

Work Cited 

 “Car Depreciation: How Much Value Will a New Car Lose?” CARFAX, 5 Feb. 2019, www.carfax.com/blog/car-depreciation. 

Issa, Erin El. “Why Is Credit Card Debt 'Bad' Debt?” NerdWallet, 15 June 2016, www.nerdwallet.com/blog/credit-cards/credit-card-debt-bad-debt/. 

“Good Debt vs. Bad Debt - Types of Good and Bad Debts.” Debt.org, 2 Apr. 2019, www.debt.org/advice/good-vs-bad/. 

A New Way to Invest- Roth IRA’s

So What is a Roth IRA?

    A Roth IRA is a type of retirement plan that helps you to grow your money either with a higher risk or at a stable, slower pace. Because it is a retirement plan you can’t pull out the funds you put in until you are 59 ½ years old, but the money you put in there will offer you a much greater expected rate of return than a traditional savings account or an employer offered retirement plan. But, there’s a catch. If you make over $139,000 you can no longer contribute to your Roth, it’s still there for you compounding interest but the funds you have in it, are the finds you will have to work with until you want to pull it out.  The best part is that the money you take out is 100% Tax Free! The money you put in has already gone though your Federal and State Taxes, Social Security, and Medicare, so when you put in in, that’s it! Your money continues to grow tax free even when you pull it out later in life. You can only contribute $6,000 a year to your Roth IRA account per year but that number changes to $7,000 when you turn 50.  There is a way of adding more funds to your Roth through your 401k plan with your employer through a “Backdoor Roth.” A completely legal way of getting around the $6,000 limit.

 

 

The 2 Routes to your Roth

    You can choose to take two different routes through your Roth IRA. The first is to go with rolling CD’s that mature at different dates to take advantage of changing interest rates. Or you can create an investment portfolio which isn’t FDIC insured and you could lose money.  Investopedia recommends that younger people invest in the portfolio option because they have more time to play the economy and the stock market and grow their  funds larger, faster. The CD option is 100% FDIC insured up to $250,000 but will offer less returns in the same amount of time than a typical investment portfolio. Most people a few years before retirement take their investments and turn them into CD’s to maintain the wealth they have grown over the years before retirement. 

An Example

Assume that when you turn 18 you deposit $2,000 into a Roth IRA and choose to only go the route of CD’s. Every year you deposit $1,000 into the fund and never make above the maximum annual income(it can change over time). By the time you retire you will have made $112,013 more than a traditional retirement IRA or retirement package. 

The Exception to Pulling Out Funds

The idea of leaving your money in the Roth IRA to grow and you not having access to it until you retire may be something that turns people away from a plan like this. However there is one exception. The IRS will allow you to pull out up to $10,000 once to use for a first time house purchase or downpayment. $10,000 is 5% of a $200,000 home so it is a good way to make sure you have some money ready for a home purchase.  But that is unfortunately all you can do to take money out.  

 Final Remarks

    A Roth IRA is something every young person should consider due to the time they have left before retirement to use their money in higher risk investment and try to maximize a return. It could grow much faster than inflation and certainly faster than a traditional Savings Account. Plus the $10,000 you can take out to buy your 1st house can really help a lot of people get started in life. So why wait! Open a Roth IRA as soon as you turn 18 to maximize your retirement fund and make the most of the money you make. 

Works Cited

Chorpenning, Ashley. “What Is an Average Roth IRA Return?” SmartAsset, SmartAsset, 22 Nov. 2019, smartasset.com/retirement/average-roth-ira-return.

Hayes, Adam. “What Is a Traditional IRA?” Investopedia, Investopedia, 3 Sept. 2020, www.investopedia.com/terms/t/traditionalira.asp.

Segal, Troy. “Roth IRA Certificates of Deposit.” Investopedia, Investopedia, 28 Aug. 2020, www.investopedia.com/roth-ira-certificates-of-deposit-4770965.

Segal, Troy. “Roth IRA Certificates of Deposit.” Investopedia, Investopedia, 28 Aug. 2020, www.investopedia.com/roth-ira-certificates-of-deposit-4770965.

Segal, Troy. “The Complete Guide to the Roth IRA.” Investopedia, Investopedia, 28 Aug. 2020, www.investopedia.com/terms/r/rothira.asp. 

The Impact of Riots on the Economy

 The Impact of Riots on the Economy

Alexa Starich

This year has been unprecedented: a global outbreak, threats of a third world war, civil unrest, murder hornets and raging wildfires -- all parts of a much more extensive list of events. All of these events have had some sort of toll on our society; in particular, the riots will impact the economy much through the next decade. VOA News reports that businesses and neighborhoods where civil protests have turned violent will have to deal with not just the aftermath of the protests, but with multiple exasperating factors that will make economic recovery much more difficult. These factors include pushing businesses to the edge, substantial insured property losses with decreased property values, and a decline in overall economic activity. 

The image above (courtesy of PCS and the Claims Journal) shows how the civil disturbance that started in Minneapolis after the killing by police of George Floyd has spread to over 21 other major metropolitan areas. Janet Ruiz, director of strategic communications for the Insurance Information Institute, said that “riot losses will surpass the previous record for civil unrest damages that was set in 1992 (the Rodney King riots in LA)...insured losses from that event reached $775 million, or about $1.4 billion in 2020 dollars.” PCS said the rioting in Minneapolis could reach $25 million in damages for Minnesota alone. The company has not yet updated the total amount of estimated insured losses; however, the Wall Street Journal currently estimates more than $50 million in damage nationwide. 

It’s difficult to predict how much damage civil unrest can do to the economy, but historically it is significant and entails far more than the damage to the capital stock of buildings and vehicles. In fact, the effects are much more long term and quite possibly permanent. William Collins and Robert Margo, economists who studied the effect of the riots after the assassination of Martin Luther King Jr. found that in areas most affected by the destruction, property values were still economically depressed in the years immediately following the riots and remained so for the next 20 years. Moreover, another study looked into the neighborhoods that were affected. The study, by Marcus Casey and Bradley Hardy, found two main consequences. First, in the years following the riots, all of the affected neighborhoods were “declining on a number of quality-of-life indicators that were substantial.” Second, the “riot-affected neighborhoods remain among the most economically challenged”, which shows how stunted the economic growth and development in those areas became. Also, this increased the scarcity of jobs and opportunities in those areas. 

It is important to highlight that the vast majority of protests this year have been peaceful, in fact, CNN reports that 93% of Black Lives Matter related protests indicated no signs of violence. However, a poll also done by CNN shows that the vast majority of Americans choose not to engage in areas where a protest has taken place. This is mainly due to the media in showcasing the 7% of protests that engage in violence, ultimately to create fear among the public. A major result of this is a decrease in economic activity in areas where a protest has occurred. VOA News states how many businesses are struggling with the coronavirus shutdown and with low employment. Adding in low economic activity as a result of protests has caused businesses that were holding on by a thread to be cut. 

In all, the Black Lives Matter protests have unintentionally created more negative uproar in both our society and our economy. Even though civil protests are a natural part of advancing society, as Victor Matheson, professor of economics at College of the Holy Cross, puts it, “People rebuild from hurricanes and can prepare for them... Social problems seem a lot harder for the country to grapple with.” Why people are hesitant to solve social problems -- especially when they create more problems as seen here with the economy -- who knows. In the end, understanding the consequences of our actions can help prevent major setbacks in our society and economy.

Works Cited

“Economically, Riots Endure.” Marketplace, 4 June 2020, www.marketplace.org/2020/06/01/riots-lasting-economic-impact/.

Garver, Rob. “Economic Damage From Civil Unrest May Persist for Decades.” Voice of America, 2 June 2020, www.voanews.com/usa/nation-turmoil-george-floyd-protests/economic-damage-civil-unrest-may-persist-decades.

Kaur, Harmeet. “About 93% of Racial Justice Protests in the US Have Been Peaceful, a New Report Finds.” CNN, Cable News Network, 4 Sept. 2020, www.cnn.com/2020/09/04/us/blm-protests-peaceful-report-trnd/index.html.

Polumbo, Brad. “The Problem With The Argument That Riots Are 'Just Property Damage': Brad Polumbo.” FEE Freeman Article, Foundation for Economic Education, 30 July 2020, fee.org/articles/vandalism-is-violence-destructive-riots-are-not-just-property-damage/.

Sams, Jim. “Insurers May Rethink Property Risk After Unprecedented Losses From Riots.” Claims Journal, 13 July 2020, www.claimsjournal.com/news/national/2020/07/06/298012.htm. 

US Citizens scramble to find work amidst Covid-19

 US CITIZENS SCRAMBLE TO FIND WORK AMIDST COVID-19

By: Hailee Vargo

2020. A year many want to go away, and a year many want to forget. Millions of people have been affected by Covid-19, and right now 2020 graduates are feeling the brunt of it. The pandemic has forced many local and nationwide businesses to shut down or reduce staff, dramatically crashing the job market. According to CNN, over “20.5 billion” jobs have been lost this year in the US. The job market has become so bad the White House itself has even acknowledged the damage.

The damage isn’t done and is expected to only get worse, in fact, by the end of 2021 we are expected to see the unemployment rate go back to 7.5%, but this is still not back to pre-pandemic levels. Not only are millions of Americans that were employed are now unemployed, but the college graduates that are looking to start their careers can’t find a place to begin in the career that they went to college for.

So what does this mean for our economy? Nothing good. Families who were used to spending a lot of money are now limiting the items they buy from basic necessities like food and water to luxury items like televisions and gaming consoles. The US savings rate has increased to about 13.1% which is the highest it's been since 1981, and since our economy has a huge stake in consumer spending this is a big deal.

College students are also facing a nightmare when it comes to the internships that they have spent the majority of their undergraduate years working with companies that they thought they were going to follow through with the job they had been promised. Students were later told that the job offers were rescinded, not due to their lack of skill or work ethics, but simply because the job was no longer available due to layoffs and buyouts because of the pandemic. 

Companies tried to explain that the workers that had been there for ten, fifteen, or even twenty years have lost their jobs and were struggling for basic necessities such as food, house payments, auto payments, medications, not to mention they no longer had health insurance. 

Some of the largest companies in the US including General Motors, Under Armour, Carmax, Dicks Sporting Goods, Cheesecake Factory, BestBuy, L. Brands (Bath and Body Works), Tesla, Disney, etc., together with other major companies, closed out the week ending on April 4th with approximately 8.2% or 12 million members of the US workforce having to apply for unemployment insurance. This is the highest level since 1967.

There have also been alarming college student mental health statistics. Since the start of the pandemic, 27% of college students have been diagnosed with depression. 57.7% of students have felt “overwhelming anxiety” in the past year. 39% of all students in the US report dealing with some kind of mental illness and only 9% of college students in the US decided to seek professional help. The United States needs to step up and provide help to those who do not have insurance because as young adults, you are no longer allowed on your parents insurance.

Works Cited:

Egan, Matt. “Here's When the US Job Market Will Recover.” CNN, Cable News Network, 9 May     2020, www.cnn.com/2020/05/09/economy/jobs-report-unemployment-coronavirus/index.html. 

Blake, Suzanne. “The Class of 2020 Is Getting a Crash Course in Pivoting - Changing Their Career Outlook, Delaying Graduation - Whatever It Takes.” CNBC, CNBC, 10 July 2020, www.cnbc.com/2020/07/10/its-a-tough-job-outlook-for-college-graduates-in-the-class-of-2020.html. 

Does Universal Design help or hurt the economy?

 Does Universal Design help or hurt the economy?

Erin Harrigan

Universal Design is the concept of making homes, businesses, and public places more accessible for all people, regardless of age or ability. Although most commonly it is used to make places more wheelchair accessible, it is actually used to accommodate everyone. In PHS right now, there are many examples of Universal Design being used including handrails, similar floorplans on the first and second floors, and easy to clean materials. These elements can be transferred into homes to make them more accessible to owners. 

In recent years, the term Aging in Place has emerged in the residential architecture world. The U.S. Centers for Disease Control and Prevention defines aging in place as "the ability to live in one's own home and community safely, independently, and comfortably, regardless of age, income, or ability level”. Aging in place has many benefits including keeping the elderly safer, improving seniors’ quality of life, and maintaining independence. In addition, the elderly get to keep their own routines and way of life. Transitioning from home to home at an elderly age can be difficult, as “experts say it typically takes between three and six months for someone to adjust to assisted living.” Universal Design, whether through the nursing home industry, at home, or in our daily lives, has had a positive impact on the economy.

Nursing Home Industry- 

Nursing care facilities are a 137 billion dollar industry. Growing at a rate of 1.1% per year in the past 5 years, nursing homes produce jobs for nurses, revenue, and a place for the elderly to live in their later years of life. In-home caretakers also provide jobs. To keep these jobs available, new people have to be admitted into nursing homes. On average there are about 2 residents per 1 nurse in a nursing home, and nursing home facilities typically are 88% full, resulting in many job opportunities, important to economic growth. The map of the United States shows nursing jobs as a percent compared to the total workforce. In more rural areas, like North and South Dakota, nursing home jobs greatly contribute to employment opportunities.

As seen in the chart below, the population is currently shifting. Due to the Baby Boomer generation, currently ages 55-73, there will be more people requiring nursing homes than ever before. Modern medicine has also played a part, as the average life expectancy is 78 years. This number has increased by 10 years in the Baby Boomer’s lifetime. With millions facing the decision of putting their family members into assisted living, the nursing home industry is expected to grow in the upcoming years. 

Real Estate-

But what if people didn’t move into nursing homes? How would the overall economy be affected? Many simple examples of Universal Design can easily be incorporated into already existing buildings. Painting the walls a different color than the floor will increase the contrast between the two for the visually impaired. Having railings on all stairways and hallways create stability for those with motor disabilities. The use of easy to clean materials in the kitchen will keep the home decluttered as well as keep the overall space cleaner for those who are immunocompromised. 

As improvements to a home are made, it will increase the home value. As the home value increases, the resale value will be raised. According to Open Door, “updates and upgrades can add value to your home, especially in older homes that may have outdated features.” Due to the “wealth effect”, rising home prices will generally increase customer spending on goods and services and increase customer confidence. When customer confidence is high, the economy typically expands due to customers buying more big-ticket items (cars and homes) and durable goods. By using Aging in Place concepts to update homes, the economy will expand. 

As populations age and life expectancies grow, the need for adequate housing for all is a large issue. However, by making homes and care centers more accessible for people across all ages and abilities, people will be able to remain comfortable in their homes. The opportunity costs that Aging in Place architecture are great: on one hand, thousands of jobs in the nursing home industry would be lost, but on the other, the GDP would rise and consumer confidence and spending would increase. However, although either choice would benefit the economy, incorporating Universal Design into buildings, both private and public, will create a world where daily life is easy to navigate. Using these design elements will both benefit the housing market and quality of life and create new jobs for in-home caretakers and Universal Designers in place of nursing home jobs that may be lost. 

Works Cited

“4 Benefits of Aging in Place.” Visiting Angels, 7 Apr. 2020, www.visitingangels.com/knowledge-center/care-options/4-benefits-of-aging-in-place/348#:~:text=Aging in place tends to,of contracting a serious illness.

“8 Critical Factors That Influence a Home's Value.” Opendoor, 19 Sept. 2019, www.opendoor.com/w/blog/factors-that-influence-home-value.

“Benefits and Drawbacks of Rising House Prices: Economics.” tutor2u, 14 Sept. 2020, www.tutor2u.net/economics/reference/benefits-and-drawbacks-of-rising-house-prices.

“The Economic Benefits of Improved Accessibility to Transport Systems.” ITF Roundtable Reports, 2017, doi:10.1787/9c73ac17-en.

Pettinger, Tejvan, and Elisa Robinson. “How the Housing Market Affects the Economy.” Economics Help, 12 Dec. 2019, www.economicshelp.org/blog/21636/housing/how-the-housing-market-affects-the-economy/#:~:text=In summary:,can contribute to economic recession).

Vogelsmeier, Amy, and Jill Scott-Cawiezell. “Achieving Quality Improvement in the Nursing Home.” Journal of Nursing Care Quality, vol. 26, no. 3, 2011, pp. 236–242., doi:10.1097/ncq.0b013e31820e15c0.

Willard, Gregory, et al. “Moving a Parent to Assisted Living: 12 Strategies to Ease the Transition.” Working Daughter, 23 Feb. 2019, www.workingdaughter.com/when-you-move-a-parent-to-assisted-living/.

What Is a Credit Score?

 by Naomi Stewart

A credit score is a three-digit number that can usually range from 300-850, and is designed to represent your credit risk, or in other words the likelihood of you paying your bills on time. In order to achieve a good credit score it would be wise to buy your first credit card at the age of 18. While you’re young and as you continue to get older you’ll start building up your credit score which eventually leads to buying a house, or a car. Now, credit scores can be calculated by using information in your credit reports, including your payment history, the amount of debt you may have, and lastly how long your credit history is. Higher scores indicate that you’ve demonstrated responsible credit in the past, which could lead to potential lenders and creditors to have more confidence when looking at your credit. 

Now, let’s take a closer look at what a credit score means. From the chart if your credit score ranges from 350-549, you have bad credit. There are about 16% of people who potentially suffer from having a bad credit score. This typically means that if you were to decide to buy a car by getting a loan from the bank. They would be more hesitant to give you a loan since your credit score is so low. However, if your credit score ranges between 750-850 this is considered excellent. There are usually 30% of people that have excellent credit scores. Now, having an excellent credit score can be beneficial for a couple of reasons. Reason one; if you are planning to buy a house and you want to ask the bank for a loan you’re able to do so especially because your credit score is excellent. The second reason; you could receive credit cards in the mail from other solicitors this could mean that they know you have a good credit score and want you to use their credit card to build your credit score with them. 

Why Are Credit Scores Important? 

Those with higher credit scores who tend to receive more agreeable credit can lead to lower payments and less paid interests over the account. Even though everyone has a different financial and credit situation, different lenders could have different criteria when it comes to accepting credit. There are different types of credit scores that are used by lenders and creditors which can vary by industry. For example, let’s say you were to buy a car, an auto lender could potentially use your credit score that intensifies on your payment history when it comes down to auto loans. 

How To Improve Your Credit Score?

Did you know that you don’t just have one credit score but you could have hundreds, even thousands. There are a lot of credit scores however, you’ll only have three credit reports. It’s crucial that you check your credit report, rather it’s from Equifax, TransUnion, and Experian. Most often credit and fraud reporting mistakes do happen occasionally. But, if errors occur you’ll pay an extensive price of a lower credit score along with the issues that could come with it. A second way to improve your credit is to stay on top of payments. Paying any bill on time is a good way to show lenders that you’re responsible with credit. Paying bills late, can have a severe impact on your credit score. A good way to ensure that this doesn’t occur would be setting up automatic payments. Lastly, is lowering your utilization credit ratio. A credit utilization ratio is basically a relationship that’s established between your credit card balance and limits. Choosing to pay down your credit card balance while lowering your utilization ratio will result in an improved credit score. “As a rule of thumb, you should aim to pay your credit card balances off in full each month.” (bankrate.org). Credit scores can range from 300-850, this is nothing to be afraid of. As long as you are being smart, and responsible you’re one step closer to achieving a stable and financial future. 

Works Cited

“What Is a Credit Score?” Equifax, www.equifax.com/personal/education/credit/score/what-is-a-credit-score/. 

Millstein, Steven, and Steven MillsteinFounder and Editor In Chief at CreditRepairExpertSteven is the Founder and Editor In Chief of CreditRepairExpert.org. Every day. “Credit Score Range: An Evergreen Guide.” Credit Repair Expert, 2 Oct. 2018, www.creditrepairexpert.org/credit-score-range/. 

Black, Michelle. “How To Improve Your Credit Score.” Bankrate, Bankrate.com, 7 July 2020, www.bankrate.com/personal-finance/credit/how-to-improve-your-credit-score/.