By Clay Thompson | Intern
Inflation rates in the U.S. economy ended 2021 with a 7% increase in inflated prices for consumer goods — a 40-year high, according to USA Today. The end of 2021 also brought about a decades-high record growth of gross domestic product in the fourth quarter of 2021, according to the Wall Street Journal.
Two Baylor business students shared their reactions and experiences in response to the changing economy.
Houston sophomore and pre-business major Joshua Wilson said he hasn’t seen a largely significant impact of inflation in his daily life.
“Whenever I go shopping personally, I don’t often keep track of prices historically,” Wilson said. “But I do see headlines — like for example, Starbucks just raised the price of their coffee and things like that. Gas prices are also a big one; a lot of people do notice that.”
Starbucks is raising its coffee prices, according to the New York Times. The business is blaming this on supply chain issues as well as a sharp rise in labor costs, the article said.
Plano senior and marketing and management major Madison Eden said she has noticed these changes in the economy and how they have affected the consumer market.
“I think one of the reasons it’s most noticeable right now too, is because we haven’t had a huge wage change in the past couple of years,” Eden said. “And so, when you have these extreme prices from inflation, and then you’re still getting the exact same wage that you were pre-pandemic, you’re obviously going to be like, ‘OK, why am I getting the exact same product, but my paycheck hasn’t changed and the price of everything has?'”
According to AXIOS Austin, the minimum wage for Texas has remained at $7.25 since 2009 and matches the current federal minimum wage.
Eden said her business classes at the Hankamer School of Business have been addressing these recent economic changes. Specifically, one class came to her mind when talking about the American economy.
“The MIS 3305 class I think did a really good job,” Eden said. “We were studying remote work environments in general. We were already kind of looking at trends in business, and what does that mean? And so naturally, you’re going to talk about what’s going on in the world today, which a lot of that has to do with supply chain shortages.”
According to CBS News, recent supply chain shortages have cut inventory across many consumer industries, but the microchip industry has been the most impacted by these shortages. The industry reportedly cost the U.S. $240 billion last year.
“You know, things like car chips that we were getting specifically from Taiwan that we’re not getting anymore, and so we don’t produce those,” Eden said. “So the supply chain raised crisis up because it was taking longer to get those things, so that just naturally kind of messed with prices of really everything.”
The global chip shortage, caused by the COVID-19 pandemic, has slowed or stalled the production of many electronic items, including the Sony PS5 gaming console and even some cars such as the Ford F-150, according to CNET.
Despite the rising inflation rates, 2021 also saw a larger than expected increase of gross domestic product, which rose 6.9% at the end of December, according to CNBC. This means even though inflation rates raised prices, the output of goods produced in the U.S. was actually higher than in previous years.
Eden and Wilson recommended that students seek more knowledge on economics and watch the news to look for the latest changes and trends.
“Practically speaking, I would say it’s important to learn about it [inflation] and why it happens,” Wilson said. “I think basic economic knowledge is pretty important to have.”