In recent times, there have been suggestions that the United States may be on the verge of losing its standing as the world's omnipotent economy. In addition to the impact of the global recession, the U.S. has also suffered from a steadily rising youth unemployment rate, which peaked at 26.2% in 2011 and represents a decade-long decline of American economic influence.
Despite this, however, statistics suggest that the decline of the U.S. economy may have been exaggerated. Not only has it showcased signs of modest and consistent expansion throughout the last financial quarter, but disappointing growth figures from China have also cast considerable doubt on the assertion that it will depose America as the world's leading economy by 2016.
The Issue of Financial Literacy and the Diminishing Influence of the U.S.
While various statistics can be used to either support or argue against America's standing as the leading international economy, it cannot be denied that the U.S. faces considerable fiscal challenges in the years ahead. As sequestration cuts of approximately $80 billion begin to impact low-income households and the working poor, for example, the federal government is clearly struggling with the consequences of failing to determine a long-term financial course. Part of the Budget Control Act, these reductions also offer an insight into how a lack of decisiveness has tarnished America's reputation as an esteemed economic haven.
America has even fallen behind Australia and the United Kingdom in the fight to promote financial literacy, which has become a significant global concern in the wake of the recession. Although the U.S. Consumer Financial Protection Bureau (CFPB) recently unveiled a new initiative to advance financial education in Grades K-12, this came after political leaders in the U.K. and Australia had already established legislation that made this subject matter mandatory in their respective countries. Where once America would have led and blazed a trail for others to follow, it was forced to tread meekly in the shadows of more proactive nations.
Local Government and the Role of the CFPB
Of course, it is fair to suggest that the U.S. may have been partially hindered in this instance by its political infrastructure. Education and curriculum management is governed at the state level in the U.S., which means that each local authority has the power to determine how and what its children are taught. This is diametrically opposed to the systems operated in the U.K. and Australia, where a central governing body makes such decisions. So with a federal mandate for K-12 financial education unlikely in the U.S., the fact that there is at least a proposed initiative and a common consensus between state leaders should provide some comfort to American citizens.
In addition to this, the involvement of the CFPB in this matter has provided some much needed momentum to the promotion of financial literacy among American students. With a valid reputation as the leading protector of consumers and their financial interests, the agency appears to have turned its attention to children and their role in driving a sustained economic recovery in the future. Given the cyclical nature of recession in the U.S. and around the world, it is logical to presume that prioritizing financial literacy among youngsters offers the best chance of breaking this trend going forward.
The Benefits of Financial Education: Can it Help to Sustain an Economic Recovery in the U.S.?
So if America is to sustain its tentative economic recovery and reclaim its status as the omnipotent financial leader of the world, a nationwide program of fiscal education may well hold the key. To begin with, teaching fundamental economic basics to children will help them to develop their understanding of personal finance, and this can then be translated into practical money management skills as they grow older. This is particularly relevant with regards to consumer and household expenditures, as the news that U.S. households have reduced their debt levels by more than $1 trillion since 2008 creates an ideal platform that the next generation of adults can build upon.
With the nation's level of youth unemployment also in mind, financial education may teach students necessary financial skills that can be applied to secure future jobs. While there are far less U.S. citizens aged between 16 and 24 unemployed than there were during 2011, the current rate 16.2% remains disproportionately high. With a more streamlined curriculum that teaches relevant and practical financial skills, however, future graduates can offer a more comprehensive package to employers and help to perpetuate a long-term period of economic expansion.
The Bottom Line
While the debate concerning America's economic standing will continue to rage, the need for greater levels of financial literacy remains indisputable. While the U.S. may not be in a position to push through a federal mandate for financial education, a sustained collaboration between local authorities, teachers and parents themselves can help to impart more in-depth fiscal understanding and practical money management skills. Not only will this help the next generation of adults find work and effectively distribute their finances, it may even lay the foundations for the U.S. to re-establish itself as the world's leading economy.

Related Articles
  1. Personal Finance

    The Role Of Parents In Financial Education

    The need for a concerted program of financial education cannot be ignored, and even though many parents are ill-equipped to lead the charge, there are numerous programs they can support.
  2. Personal Finance

    What Buffett Would Say To The 50K’ers

    FOX Business Network's Liz Claman will interview Berkshire Hathaway CEO Warren Buffett in an exclusive sit-down on Monday May 6th at 9:30 a.m. following the Berkshire Hathaway shareholder meeting. ...
  3. Personal Finance

    Teaching Financial Literacy To Teens

    The final guide in the Financial Literacy series focuses on helping teens prepare for adulthood and all the financial challenges involved.
  4. Savings

    Teaching Financial Literacy To Tweens

    In this tutorial we cover financial topics for children between the ages of eight and 12, from income and expenses to identy theft.
  5. Savings

    Teaching Financial Literacy To Kids

    In this tutorial we introduce key financial concepts that are appropriate for young children, including tips for getting kids to think about and understand the topics.
  6. Investing News

    What Does the Fire Monkey Mean for Your Portfolio?

    The Chinese new year this year corresponds to the monkey, a quick-witted, playful, tricky figure that means well but has a penchant for causing trouble.
  7. Investing Basics

    5 Questions First Time Investors Should Ask in 2016

    Learn five of the most important questions you need to ask if you are a new investor planning on starting an investment program in 2016.
  8. Products and Investments

    A Guide to DIY Portfolio Management

    These are some of the pillars needed to build a DIY portfolio.
  9. Investing Basics

    Choosing the Right Financial Advisor

    The right financial advisor for one person may not be right for another.
  10. Savings

    Banks: Brick-and-Mortar or eBank?

    Brick-and-mortar banks and ebanks usually offer the same services, but there are differences between the two.
  1. Do financial advisors charge VATs?

    The Personal Finance Society (PFS) and with Her Majesty's Revenue and Customs (HMRC) have outlined when a value-added tax ... Read Full Answer >>
  2. Do Sallie Mae loans go directly to your school?

    Sallie Mae is the biggest provider of financial aid and student loans in the United States. The company operates as a private ... Read Full Answer >>
  3. What are working capital costs?

    Working capital costs (WCC) refer to the costs of maintaining daily operations at an organization. These costs take into ... Read Full Answer >>
  4. Do financial advisors get paid by mutual funds?

    Financial advisors are reimbursed by mutual funds in exchange for the investment and financial advice they provide. A financial ... Read Full Answer >>
  5. Do financial advisors prepare tax returns for clients?

    Financial advisors engage in a wide variety of financial areas, including tax return preparation and tax planning for their ... Read Full Answer >>
  6. Is a financial advisor required to have a degree?

    Financial advisors are not required to have university degrees. However, they are required to pass certain exams administered ... Read Full Answer >>
Hot Definitions
  1. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  2. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
  3. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
  4. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
  5. Discouraged Worker

    A person who is eligible for employment and is able to work, but is currently unemployed and has not attempted to find employment ...
  6. Ponzimonium

    After Bernard Madoff's $65 billion Ponzi scheme was revealed, many new (smaller-scale) Ponzi schemers became exposed. Ponzimonium ...
Trading Center