For a long time now, rumors of a declining economy have been on the wind. People have known and felt it, even if it wasn't reported by the news media or said out loud. And, as we have seen, in the year 2008 unemployment has reached unprecedented highs.
Unfortunately, unemployment is a part of our economy. It's likely that there will always be people out of work for whatever reason. Now the rate is higher than it has been in recent memory. This increase in unemployment will doubtless lead to other problems that not only affect individual finances but will also take a substantial toll on the economy as a whole.
Gas prices affect unemployment numbers. When the price of gas rose uncontrollably earlier this year, people couldn't believe their eyes – or their pocketbooks. In some places gas rose to as much as $6 a gallon. For the person commuting more than thirty minutes to work, the necessary amount of money to be budgeted for gas each month was effectively doubled. Cars that used premium gas or vehicles that burned diesel fuel were hit were hit even harder. Truck drivers who ran independent businesses were likewise rocked to their foundations. For many, rising gas prices and lower compensation meant selling their rigs or going back to work for other trucking companies to pay their mortgages and vehicle loans.
As is always the case, the higher cost was passed on to businesses that depended on deliveries for their livelihood. Food prices rose as the cost was once again passed on to the consumer. Businesses cut costs by laying off employees, trying to lower their overhead expenses as much as possible. Many large companies closed new stores, putting thousands of people in the unemployment line. Even huge mega-companies like General Motors dumped employees to lower operating costs. As a result, these employees (who are also average consumers) can't make ends meet for themselves or their families.
Even the stock market has taken several direct hits. Incredible losses have been reported and people are worried about it going lower still. Also, the government has bailed out several large financial and insurance corporations in an effort to stop the entire economy from destabilizing. It's likely that the stock market will eventually recover, but the unemployment rate may rise even higher before things actually begin to get better.
Unemployment benefits pay only a percentage of the usual income that an employee would earn. What's more, the receiver also has to pay taxes on that benefit when April 15th rolls around. In the meantime, he or she has to stretch that smaller income over ever-increasing bills created by economic instability.
Millions are threatened with the specter of unemployment as the price of everything from gasoline to dry goods continues to increase. However, one thing that the rising unemployment rate did accomplish among many still holding jobs was to wake them up to the importance of having an emergency savings fund. It's therefore wise to prepare for future unemployment increases and higher overall prices by being frugal with saving and spending right now.