In the “old days”, personal finance seemed so much more straightforward. Wages were good enough so that almost anyone could save, and the power of compound interest did the rest. At the same time, it was cheap to get into the housing market, people were more conscious about debt, and the stock market was a no-brainer. In today’s world, it’s not always so easy. Ultra-low interest rates have fueled a boom in debt and asset prices, making everything from houses to stocks very expensive. Meanwhile, students have accumulated $1.45 trillion in student debt, and grads will be squeezed for years attempting to pay it all off.
The Bold New World
In this challenging new landscape of personal finance, future generations would likely benefit from learning the basics around saving, making budgets, and investing, as well as how to evaluate major personal finance decisions like buying a home or paying for a college education. Today’s chart looks at one facet of this, which is the percentage of high schools that currently require some sort of personal finance course to graduate. Using data from a study by financial literacy non-profit Next Gen Personal Finance, it’s clear that the vast majority of students in the U.S. are not required to learn these basic skills and concepts – and things are particularly worse off in lower-income communities.
Access to Financial Literacy
After analyzing data from high schools representing over 85% of all students, the main conclusions of the study were as follows:
Only 16.4% of U.S. students are required to take a personal finance course to graduate high school. Five states do have a personal finance requirement: Alabama, Missouri, Tennessee, Utah and Virginia. But outside of these states, the proportion of students with a personal finance requirement drops to 8.6%. Meanwhile, only 5.5% of low income schools (outside of mandate states) have personal finance as a requirement.
Why is this important?
To understand why financial literacy is important, look no further than the most recent grad class: millennials. With $1.45 trillion in student debt, millennials find themselves in a tough spot to begin with – but 45% regret even taking out loans to that extent in the first place. At the same time, only 24% of the generation demonstrates “basic” financial knowledge, while 70% are already stressed about saving for retirement. A better financial education could definitely help change some of these figures, whether it is through schools, or through vastly improved online resources that students access on their own volition. on Today’s chart measures the extent to which 41 major economies are reopening, by plotting two metrics for each country: the mobility rate and the COVID-19 recovery rate: Data for the first measure comes from Google’s COVID-19 Community Mobility Reports, which relies on aggregated, anonymous location history data from individuals. Note that China does not show up in the graphic as the government bans Google services. COVID-19 recovery rates rely on values from CoronaTracker, using aggregated information from multiple global and governmental databases such as WHO and CDC.
Reopening Economies, One Step at a Time
In general, the higher the mobility rate, the more economic activity this signifies. In most cases, mobility rate also correlates with a higher rate of recovered people in the population. Here’s how these countries fare based on the above metrics. Mobility data as of May 21, 2020 (Latest available). COVID-19 case data as of May 29, 2020. In the main scatterplot visualization, we’ve taken things a step further, assigning these countries into four distinct quadrants:
1. High Mobility, High Recovery
High recovery rates are resulting in lifted restrictions for countries in this quadrant, and people are steadily returning to work. New Zealand has earned praise for its early and effective pandemic response, allowing it to curtail the total number of cases. This has resulted in a 98% recovery rate, the highest of all countries. After almost 50 days of lockdown, the government is recommending a flexible four-day work week to boost the economy back up.
2. High Mobility, Low Recovery
Despite low COVID-19 related recoveries, mobility rates of countries in this quadrant remain higher than average. Some countries have loosened lockdown measures, while others did not have strict measures in place to begin with. Brazil is an interesting case study to consider here. After deferring lockdown decisions to state and local levels, the country is now averaging the highest number of daily cases out of any country. On May 28th, for example, the country had 24,151 new cases and 1,067 new deaths.
3. Low Mobility, High Recovery
Countries in this quadrant are playing it safe, and holding off on reopening their economies until the population has fully recovered. Italy, the once-epicenter for the crisis in Europe is understandably wary of cases rising back up to critical levels. As a result, it has opted to keep its activity to a minimum to try and boost the 65% recovery rate, even as it slowly emerges from over 10 weeks of lockdown.
4. Low Mobility, Low Recovery
Last but not least, people in these countries are cautiously remaining indoors as their governments continue to work on crisis response. With a low 0.05% recovery rate, the United Kingdom has no immediate plans to reopen. A two-week lag time in reporting discharged patients from NHS services may also be contributing to this low number. Although new cases are leveling off, the country has the highest coronavirus-caused death toll across Europe. The U.S. also sits in this quadrant with over 1.7 million cases and counting. Recently, some states have opted to ease restrictions on social and business activity, which could potentially result in case numbers climbing back up. Over in Sweden, a controversial herd immunity strategy meant that the country continued business as usual amid the rest of Europe’s heightened regulations. Sweden’s COVID-19 recovery rate sits at only 13.9%, and the country’s -93% mobility rate implies that people have been taking their own precautions.
COVID-19’s Impact on the Future
It’s important to note that a “second wave” of new cases could upend plans to reopen economies. As countries reckon with these competing risks of health and economic activity, there is no clear answer around the right path to take. COVID-19 is a catalyst for an entirely different future, but interestingly, it’s one that has been in the works for a while. —Carmen Reinhart, incoming Chief Economist for the World Bank Will there be any chance of returning to “normal” as we know it?
