4th Quarter Lesson 1

Washington Post Articles

Mentor text for assignment

Julian Lord

The lesson I learned from the Great Depression was that once consumers worry about debt they will stop spending and will sink our consumer based economy. In William E. Leuchtenburg’s, The Perils of Prosperity, 1914-1932 he stated, “In other words, consumers bought goods on installment at a rate faster than their income was expanding, but it was inevitable that a time would come when they would have to reduce purchases, and the cutback in buying would sap the whole economy.” In the lead up to the Great Depression many Americans were living in debt even though they looked prosperous, which was due to them buying consumer items on credit through installment plans. This illustrates that even though our economy looked strong prior to the pandemic now people will prioritize savings due to the loss of jobs and it will cause many people who sell things to the public to lose their jobs permanently.

The lesson I learned from the Great Depressions that consumers would stop using credit to buy items thus hurting the job prospects of other Americans is already happening. In the Washington Post’s April 4th perspective article, Rent, mortgage, car loans, utilities and child support. The other bills can wait. Michelle Singletary wrote, “Even before the outbreak, 59 percent of credit card holders were carrying a balance, according to a recent survey by CreditCards.com. Of those who didn’t pay off their credit card debt every month, 25 percent had been falling behind for at least three years. Another 15 percent had carried debt for more than five years.” Singletary was explaining that people would have to “triage” what bills they would pay, and credit cards were low on her list of essential bills to pay. Before the Great Depression over 70% of Americans earned less than $2,500 a year, which was considered the minimum needed for a decent standard of living. People in America today will not be spending money on frivolous products, that decrease in demand will lead to more job losses, especially in brick-and-mortar retail stores. The people with those jobs today are like the 70% of Americans before the Great Depression, therefore; I believe that unemployment will be as high as it was during the Great Depression and it will take years for our economy to recover without major institutional changes to our society.

4th quarter lesson 1