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Like Bugs Under a Microscope Consumers are so important to commerce, their collective behavior is constantly tracked and scrutinized. Government agencies and private companies study consumers like bugs under a microscope. Are consumers buying stuff? What are they buying? How much are they spending? Consumer activity is tracked monthly by the U.S. Bureau of Labor Statistics through an economic indicator called the Consumer Price Index (CPI) . The CPI tracks how much consumers paid for an imaginary sample variety of goods and services referred to as a “basket.” Information about consumer spending enables the government and businesses to make all sorts of decisions and predictions about product sales, prices, wages, and whether to hire or layoff workers. The CPI also tracks whether the economy is showing signs of inflation. The Consumer Confidence Index (CCI) is another important economic indicator produced each month by a private research organization called The Conference Board . The CCI measures how optimistic or pessimistic consumers are about the economy . When consumers are feeling good about things like job security, savings, earnings, and their financial outlook, they tend to buy more stuff. That gives a boost to commerce and the economy, and tells businesses and government agencies that they are on the right track with policies, products, services, and prices. When the CCI indicates that consumer confidence is down, businesses and government agencies try to figure out why, so they can make adjustments to policies, products, and prices to improve the consumers‘ outlook and keep the economy growing. The CPI, CCI and GDP are frequently mentioned in the financial news, so you should have a basic idea of what they are. The Big Picture Financial literacy is the ability to understand how money works in the world. There are many aspects to financial literacy, but the focus of this course is on big picture, global financial literacy because this knowledge is critical to your college and career readiness. The pursuit of wealth and prosperity is expressed as commerce. Vibrant local, domestic and international commerce is key to the economic health of a nation. 21st century commerce is highly globalized, with multinational companies, interdependent economies and businesses. E-commerce is a thriving and rapidly expanding area of commerce. Economic indicators like the Consumer Price Index, Consumer Confidence Index and Gross Domestic Product provide data enabling government and businesses to make decisions and predictions about the economy, and make or adjust economic polices or practices. GDP is an indicator of the economic health of a nation. The consumer is an essential component of commerce. SLIDE 1L PRODUCT PREVIEW
Let’s Practice! Select from the following practice activities for this lesson: I Spy Commerce in Action (whole class exercise)
Direct students to the I Spy Commerce illustration in chapter 1 of the student workbook. This activity is a practical application of the lesson objectives as well as an introduction to the course. Read aloud: This is a “snapshot” of a pretty typical city, buzzing with commercial activity. Study the picture. You have 10 minutes to identify all of the ways you observe commerce in action .
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THE 21st CENTURY STUDENT’S GUIDE TO FINANCIAL LITERACY
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