Wall Street abounds with fears of the deepest economic recession since the 1930s. Sen. Kent Conrad (D-N.D.) recently noted that three to four million people could lose their jobs in the next year. With reports of grim economic news now becoming the daily routine, University students may be wondering how the current economic downturn will affect their lives. While it is tough to predict how each person will fare, here are some possible questions and concerns that a typical college student might face:
Question: It seems like everyone is losing money these days. The stock market is plummeting, and banks are failing or being acquired by rivals. What should I do with my savings?
During the last several weeks, the value of investments in the stock market has shrunk considerably. Even students who keep their savings in banks, however, might be on edge. It is important for each student to know that the money in his or her bank account is safe.
The federal government typically insures all bank deposits up to the first $100,000. The government extended that insurance Oct. 3, up to $250,000 in savings per person. This includes several kinds of deposits, like certificates of deposits, savings accounts or checking accounts. Also, the federal government has moved to insure investments in money market accounts. Students still worried about putting all of their money in banks can go to the U.S. Treasury’s Web site and purchase Treasury bills or bonds. These financial instruments are considered the safest of all — they pay a set interest rate and are sold by the U.S. government.
Question: Oil is now trading around $65 per barrel. The last time oil was this cheap, gasoline cost an average of $2.31 per gallon. So why is the national average still $2.67 per gallon?
The national average reached a record $4.11 per gallon in July. Every time someone took an extended trip, he or she may also have wondered how much money it would cost in gas. Now, with oil prices having fallen 55 percent in three months, many may be hoping that gasoline prices will fall rapidly as well.
But the price of gas is still about $2.65 per gallon! The main reason is basic supply and demand. When demand for gasoline only moderately weakened after rising above $3 a gallon, producers became reluctant to lower prices as oil prices fell. Many sellers thought, “Why lower the price of gas if people are willing to pay for it at a higher price?” So, expect sellers to only lower prices gradually in the next few weeks. Most important, prices at the pump will continue go down, just more slowly than many of us would like them to.
Question: With the stock market down by so much, should I consider investing in stocks and other financial instruments and take the profits when the market rebounds?
With the market plummeting, some market observers are wondering if they should buy stocks at cheap prices. Be careful with this strategy. While the Dow Jones has fallen 6,000 points from its all-time high, many analysts think it could fall even more as the economy worsens. Of course, some investors (like Warren Buffett) think now is the time to buy stocks because many are at historic lows. Ultimately, you have to decide if the potential gains outweigh the risks, but no matter what you decide, keep in mind that the current economic downturn is likely to continue through all of next year (and into 2010 as well).
For those of us who are deeply worried about the economy, keep in mind that the United States has weathered many downturns before. The economy has always rebounded. While this downturn may be more severe than most, it is important to keep saving, to avoid watching the financial markets swing wildly every day and most importantly, to stay optimistic about the future.
Andrew’s column runs biweekly Thursdays. He can be reached at a.golden@cavalierdaily.com.
Read More
It’s okay not to be okay
By Mai Hukuoka | 6 days agoWhether talking to a friend, a loved one or a professional, it is so necessary, and human, to need more than you can provide for yourself.
Taking a break at Tangerines Kitchen
By Charley Thomas | January 6, 2025What the restaurant somewhat lacks in ambiance, it compensates for in tasty dishes and prompt service.
Virginia Policy Lab — a hub for student-led policy action
By Katherine Haden | December 9, 2024Students propose their own projects and collaborate with other members to research their issues of interest, brainstorm solutions and write policy proposals.
