“Students are taking an active interest in economics during these times. They are not as interested when times are good,” said Errol Hatfield, professor of economics at TCC, recently. This and a growing concern about what is happening with the nation’s economy have helped to increase enrollment in economics classes.
Indeed, one has to draw a number of supply and demand curves to grasp the subject, but not even the economists can agree if there is a recession. According to Gilbert Smith, TCC history and political science professor, there is not one – yet. He pointed out that it takes two consecutive quarters of falling gross national product to make a downturn, and last quarter the G.N.P. was up; however, the real G.N.P., after adjusting for inflation, was a negative figure.
Smith concluded by saying some people think we are in a recession now. One of those is Hatfield. For the past year, there has been a fall in purchasing power, by which we measure the value of the dollar, and there have been layoffs in autos and steel. “These things,” said Hatfield, “have a rippling effect on the economy.”
If there is a recession, it has been counteracted by inflation. “Students are like regular consumers, and they’re spending like crazy,” Hatfield continued. “Savings went down by 4.1%.” Smith agreed that “people are spending savings. People are buying new because money will be worth less in the future.”
When banks lend money, it comes from savings. To tighten credit and to ease a projected annual inflation rate of 13.2%, the Federal Reserve raised interest rates and restricted the amount of money banks could lend, according to an article in the October 22 issue of Newsweek. The effect of these actions remains to be seen.
Tight money could worsen economic conditions in the short run. “More costly credit seems almost certain to increase prices in the near term, depress business investment, and lead to increased layoffs,” reported the article. “Car sales, mostly financed by loans, will suffer as well as construction.”
Jay Janis, president of the Federal Home Loan Bank, predicts that home mortgage rates will rise to between 13 and 14%. In states such as Arkansas with a 10% ceiling and Texas with a 12% interest rate limit, mortgage money could dry up altogether. With the average age of students at TCC being 27, this could be a major concern.
“Inflation affects the number of students we get,” said Smith. “They can’t afford to spend a lot of money to go to school because some have families. Nowadays, students have to choose between having a car and other luxuries or going to school.”
More are working and going to school at the same time. One can still be a full-time student and hold a part-time 20-hour-a-week job. According to an article in the September 4, 1978, issue of Business Week, college costs have risen about 6% annually since 1973. “Tuition has not gone up in relation to the standard of living,” said Hatfield. “Teachers’ salaries haven’t gone up.”
Costs have also risen at private institutions, such as S.M.U. A student there has to shell out “$5,000 just to register,” said Smith, but he added that one of his friends’ sons had paid only $280 to go to the University of Texas at Austin. Following an example from the Business Week story, if one worked at a reasonable $3.50 an hour for 15 hours a week and 40 hours a week during the summer, allowing for five weeks’ vacation, the student going to S.M.U. could earn $2,800 per year, or 56% of the tuition cost!
For many of us, it may become the only way.