available to purchase other products.135 Americans tightened their spending on clothing and
dining-out at restaurants.136 This had a ripple effect on the rest of the economy, causing
staggering job loss among middle- and low-income people, thereby transplanting them into the
ranks of the unemployed or underemployed.137
For survival, many unemployed Americans turned to government safety-net programs
such as Medicaid, Supplemental Nutrition Assistance Program (“SNAP”), unemployment
benefits, and Temporary Assistance for Needy Families (“TANF”).138 The problem of high
unemployment compounded as more high school graduates and college students entered the job
market and faced the inability to secure adequate employment.139 Unemployed or underemployed
college graduates must balance the income they feel they could secure with the decision to invest
in a college education, illustrating the exorbitant cost of college tuition and the potential inability
to escape student loan debt.140 The consequence of reduced spending, un-or-underemployment,
and the rising mountain of consumer debt, was that the United States and global economies
contracted severely.141 A number of countries around the world are still recovering from the
financial catastrophe.142 Accordingly, finance and economics education targeted at American
youth would serve to avoid, or at least mitigate, some of the triggers that deepen economic
contraction and hopefully prevent or at least shorten future economic crises.
C. Financial Illiteracy Is Not Only a Problem During a Crisis
As examined above, the housing bust, rising unemployment, and the contraction of the
American economy illustrates the impact financial illiteracy can have on generating economic
crises. Nonetheless, there is another dimension of the impact of financial illiteracy. Americans
135 See, e.g., SPENCER COWAN & KATIE BUITRAGO, WOODSTOCK INST., STRUGGLING TO STAY AFLOAT: NEGATIVE EQUITY IN
COMMUNITIES OF COLOR IN THE CHICAGO SIX COUNTRY REGION 1-2 (2012),
http://www.woodstockinst.org/sites/default/files/attachments/stayingafloat_march2012_cowanbuitrago_0.pdf (providing examples of
how underwater mortgages impact a homeowner’s spending habits and the surrounding neighborhood).
136 U.S. Consumer Spending: Hard Times, ECONOMIST (Oct. 25, 2011), http://www.economist.com/blogs/dailychart/2011/10/us-
Americans are spending less on clothes and eating out and more on household, fuel, bills, and healthcare,
according to data from the Bureau of Labour Statistics. Between 2007 and 2010, average annual consumer
spending per unit—defined as a family/shared household or single/financially independent person—fell by
3.1% to $48, 109. Average prices over this period have risen by 5.2%, so real consumer spending has fallen by
almost 8%. The recession and economic slowdown have reduced buying power and consumers are tightening
their belts in many ways . . . .
137 Dinwoodie, supra note 24, at 191-92 (describing the conditions of the financial crisis); see Michael Snyder, The Census Revealed
America’s Fastest Growing Class: The Working Poor, BUS. INSIDER (Dec. 27, 2010), http://www.businessinsider.com/the-working-
poor-2010-12 (explaining that today one out of every three American families is low income); see also MORIN & MOTEL, supra note
21 (discussing the desire for full-time employment among lower class workers).
138 Luhby, supra note 22. “The federal government sent a record $2 trillion to individuals in fiscal 2010, up nearly 75% from 10 years
139 Harnisch, supra note 28, at 14; see also Hope Yen, In Weak Job Market, One in Two College Graduates Are Jobless or
Underemployed, HUFFINGTON POST (Apr. 22, 2012), http://www.huffingtonpost.com/2012/04/22/job-market-college-
graduates_n_1443738.html (discussing the difficulty of securing a job beyond college and the need to take that into account when
considering applying for student loans); Stacey Patton, The Ph.D. Now Comes with Food Stamps, CHRON. HIGHER EDUC. (May 6,
2012), http://chronicle.com/article/From-Graduate-School-to/131795 (“Of the 22 million Americans with master’s degrees or higher
in 2010, about 360,000 were receiving some kind of public assistance, according to the latest Current Population Survey released by
the U.S. Census Bureau in March 2011.”).
140 Yen, supra note 139; CUNNINGHAM & KIENZL, supra note 87.
141 Thayer Watkins, Dep’t of Econ., San Jose St. Univ., The Global Impact of the 2008-2009 Recession,
http://www.sjsu.edu/faculty/watkins/globalrec.htm (last visited Nov. 11, 2013) (analyzing the impact of the 2008-2009 Recession in
nations across the globe). Watkins notes that not all countries were affected by the recession, including Sweden and the Russian
Federation. Id. However, a great number were, and smaller economies were tremendously impacted. Id.
142 See Jonathan Cable & Koh Gui Qing, Global Economy-World Economic Recovery: Still Fragile, But on Track, REUTERS (Sept. 2,
2013), http://www.reuters.com/article/2013/09/02/global-economy-idUSL6N0GY0X620130902 (looking at the state of recovery from
the global financial crisis in various countries around the world).