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Contemporary is defined as happening, existing, living or coming into being at the same time.

In other words, this lesson on contemporary economics will examine what is happening in today's world. The information contained in this lesson is current in the Spring of 1997.

You will have to consult your newspapers, television or other news sources to get up-to-date information on our economy.

What we are going to do in this lesson is create a newspaper called "The Economic News."

Our newspaper will contain actual stories from current news sources.

You will be able to apply the many ECONOMIC APPLICATION TOOLS that you gathered during all of these lessons.

In addition, you will be able to use your outstanding social science skills in your analysis of these stories.

Please keep in mind the three basic economic questions.

The questions in the test will be over these news stories.

THE ECONOMIC NEWS

ECONOMIC EXPANSION

The economic expansion of the American economy celebrates its six birthday this month, but is showing no signs of old age.

In fact, reports released suggested it may be growing too much, heightening concerns that the Federal Reserve may boost interest rates soon to avoid igniting inflation. On Wall Street, bond prices were lower.

U.S. factories reported a 2.5 percent increase in orders in January, more than expected, and a surprising drop in new claims for jobless benefits last week pushed the four-week unemployment average to an eight-year low.

Analysts believe a strong February employment report today may be the deciding factor on whether to boost interest rates.

THE ECONOMY REMAINS strong without pushing prices higher. Industrial production jumped 0.5% in February, while wholesale prices dropped 0.4%. The situation poses a dilemma for the Federal Reserve Board, which meets next week to consider a pre-emptive rate increase to head off inflation.

Meanwhile, investors could be in for a bumpy ride, though a tightening isn't expected to bring a bear market (the market goes down).

GREENSPAN HINTS OF CHANGE

Federal Reserve Chairman Alan Greenspan hinted Thursday that the Fed might raise short-term interest rates, even though he described the current inflation trend as benign.

The core consumer price index, excluding food and energy prices, rose at a 2.2% annual rate the past three months vs. 1995's 2.5%. Early inflation signals such as in factory deliveries, are flashing only mild warnings.

MORTGAGE RATES SHOW INCREASE

Thirty-year, fixed-rate mortgages averaged 7.65 percent this week up from 7.56 percent last week, according to a national survey, released Thursday by the Federal government. The increase put the rate at the highest level in two weeks, when it also, was 7.65 percent.

Fifteen-year mortgages averaged 7.1 percent this week, up from 7.06 percent. On one-year adjustable rate mortgages, lenders were asking an average initial rate of 5.49%

DURABLE GOODS ORDERS UP

Orders for long-lasting durable goods rose more strongly than expected in January, the government said Thursday, citing steady economic growth at the start of 1997.

The Commerce Department said that orders for cars, computers, and durable goods meant to last three or more years jumped 3.6 percent after falling 1.8 percent in December and 1.7 percent in November.

CHANGES NOTED IN ORGANIZED LABOR

Organized labor is one constituency that cannot say it is better off after four years, and that it will likely feel the pain even more acutely as it crosses the bridge into the next century.

Between 1992 and 1996 the membership of private-sector unions shrunk more than 3%, nearly 320,000, to 9.4 million. In that period, their market share dropped to 10.2 % from 11.5% of all workers in non-government jobs.

The unions' record under Mr. Clinton extends the downward trend of private membership since it peaked in 1970 (at 17 million) and since the record high in market share in 1953 (36%).

Union membership is expected to drop to 7% by 2000, the same as it was at the beginning of the 20th century. Since 1994, government employee unions (federal, state and local) have lost nearly a quarter million members.

GENERAL MOTORS ON STRIKE

About 2,700 assembly workers at General Motors Corporation's pickup truck plant in Fort Wayne, Indiana, which produces about 25 % of the No. 1 auto maker's full-size-size pickups, went on strike Friday morning.

Workers represented by the United Auto Workers walked out in a dispute over demands that the company hire more workers to give some relief from heavy overtime schedules, unresolved grievances, and health and safety issues.

The plant is so short-handed, some workers say, that they can't take vacations.

Industry analysts said that if the strike lasts as long as a week it could reduce GM's first-quarter earnings by about $25 million.

David Healy, an analyst with Burnham Securities, said that even though a two week shutdown at Fort Wayne could reduce first quarter earnings by $50 million, GM could recoup that by making up for lost production in the second quarter.

AMERICAN AIRLINES STRIKE TALKS

American Airlines and its pilot union asked President Clinton Monday for two more days to settle their contract dispute, boosting optimism that the two sides will avoid a strike next month.

The Presidential Emergency Board (PEB) appointed by Clinton last month was scheduled to submit recommendations on resolving the labor disagreement Monday.

Federal mediator Robert Harris told the president the two sides are engaged in intensive talks and an extension will increase the likelihood of a successful outcome. AIR BAG SAFETY

The National Highway Traffic Safety Administration gave automakers new authority to produce air bags that inflate with less force to reduce the risk of injury to children and small adults.

The action which had been expected, means that cars and trucks equipped with less-powerful air bags could become available as soon as late summer.

Despite the life-saving potential of airbags, preventing an estimated 1,750 deaths since they were introduced in 1986, they have caused 62 deaths of children and small adults NHTSA said.

Under the new rules, the force with which air bags deploy could be reduced by as much as one-third. The new federal standard makes it even more important that drivers and passengers buckle their safety belts.

FIRE HAZARD LEADS TO RECALL

Sweaters and bathrobes sold by three retailers and sweat shirts sold by discount stores are being recalled after tests showed they could catch fire easily, a federal agency reported.

The U. S. Consumer Product Safety Commission said fabrics that fail these flammability tests typically burn more quickly than newspaper. In all, 6,500 terrycloth bathrobes for men and women and 106,000 fleece sweatshirts for men and boys were recalled.

ESTATE TAX DISCUSSED

President Clinton and lawmakers from both parties already have agreed this year that the estate tax is too tough on farmers and other small-business people who want their heirs to continue their work.

But it remains to be seen whether proponents of reducing the budget can win some changes after years of struggling. Though it accounts for only a small percent of all federal revenues, the estate and gift tax has proven itself to be a survivor.

REPUBLICANS AND DEMOCRATS DISCUSS BUDGET

The road to bipartisan budgets always has its ups and downs, and this week the White House and the Republican Congress hit the biggest pothole yet. So big, in fact, those even former optimists have begun to ask if the goal is reachable.

Others are suggesting that the goal is reachable if both sides give ground on long-promised tax cuts.

Two developments combined to intensify the gloom. First, House GOP (Republican) leaders pushed through, amid divisive debate, a nonbonding resolution. This resolution demanded that President Clinton write a new five-year balanced-budget blueprint.

White House Budget Director Frank Raines called the vote, totally unhelpful. The Republicans agreed.

Separately, the White House has shelved, at least for purposes of a budget deal, the idea of seeking a reduction in the government's consumer price index, which is widely held to overstate inflation.

That action pleased Democrats, who had objected because a change would lower Social Security's cost-of-living increases, but it infuriated Mr. Clinton's would-be Republican budget allies.

"He doesn't have the courage to deal with it," Senate Republican Majority Leader Trent Lott snapped yesterday.

Both sides agree that without Consumer Price Index savings they can't reach balance with both Republican tax cuts and Clinton spending initiatives.

NEW TOLLS PROPOSED

President Clinton's $175 billion transportation vision for the 21st century offers something for almost everyone. To help foot the bill, the plan would allow states to charge tolls on interstate highways.

The six-year highway bill proposed by Clinton would divert more than $4 billion from the federal highway trust fund to help rescue Amtrak, the national passenger rail system.

The highway bill proposed by President Clinton would provide $600 million to put welfare recipients to work and send larger shares of federal highway money to historically shortchanged states such as Florida and Texas.

Clinton also would spend $1.3 billion on programs to reduce traffic jams and improve air quality in urban areas. Under the bill the states would have permission to charge tolls on existing sections of the interstate system, if it is only a "modest change"

Natural gas costs rose 4.8% in January's consumer price index, the biggest one-month spurt since record keeping began in 1952. (The consumer price index is a measure of the change in average prices of items commonly purchased by consumers.)

More than half of the nation's homes are heated by natural gas.

"Consumers aren't happy with their bills. We're telling them it's a classic case of supply and demand," said a spokesman for Columbia Gas of Ohio.

AIR POLLUTION

While the Clinton administration is considering a plan to tighten air pollution controls, federal agencies complained about costs, questioned whether it would significantly improve health, and worried aloud that it could force millions to change their lifestyles.

Concerns about various aspects of the Environmental Protection Agency (EPA) proposal were raised by the President's Council of Economic Advisers.

Others voicing concerns included the President's science adviser, the Commerce, Treasury, Transportation, and Agriculture Departments and the Small Business Administration.

The EPA argues that current federal health standards for smog-causing ozone and microscopic soot are inadequate to protect public health, especially for the elderly and those with respiratory illnesses.

ICE JAM PROPOSAL

The Clinton administration is causing alarm at Great Lakes ports by proposing to charge for the cost of clearing ice from shipping lanes. The fee could raise $25 million a year starting in 1999, but Great Lakes lawmakers are mobilizing to head it off in Congress.

Various ports are clogged with ice from December into April. The fee would force shippers to move grain, coal and iron ore through other routes, which will further undermine the regional economy.

INTERNATIONAL DRILLING DISCUSSED

The government is gearing up to settle a pesky international dispute over who owns the oil and gas in the middle of the Gulf of Mexico. The U.S. State and Interior Departments are suddenly eager to clear up exactly where in the Gulf the boundary lies between U.S. and Mexican territory.

That question has lingered on the diplomatic agenda for two decades but is taking on new urgency now that offshore drilling technologies allow oil companies to explore deeper and deeper seas.

MINE PAYOFF CRITICIZED

A Clinton administration proposal to pay a mining company $65 million to abandon a gold mine near Yellowstone National Park ran into scathing congressional criticism Thursday over how it would be financed.

Several Republican lawmakers representing agricultural states accused the White House of paying off the Canada mining company, Crown Butte Resources Ltd., at the expense of a popular agriculture conservation program.

The administration Wednesday announced it had offered Crown Butte $65 million in cash over a number of years as part of an agreement reached in summer to abandon the New World Mine north of Yellowstone.

The company has yet to say whether it will accept the offer. Some aspects of any agreement must be approved by Congress. According to the White House, the money would come from royalties the Interior Department receives on coal, oil and gas leases on federal land in Montana.

FEDERAL HELP FOR HOMES

It carries an obscure label, but the Federal government's 203 (k) program may be the ultimate "fixer-upper" loan program for homebuyers.

Lenders can offer 30-year mortgages that include the purchase price as well as the estimated amount for needed repairs or renovations.

The Federal Housing Administration-insured loans are backed by the Housing and Urban Development Department through the 203(k) program.

Designed to revitalize existing housing stock in the country, the program is ideal for first-time buyers, blighted areas and the prevention of neighborhood deterioration. It also is open to people who already own and live in their home but want money to make needed repairs.

This concludes this edition of "The Economic News."

By now you have the idea that the economy truly covers every aspect of our daily lives.

The news stories also indicate the involvement of the federal government in finding the answers to the three basic economic questions.

List five examples from "The Economic News" of the control of the federal government over different aspects of the American economy. Are these controls justified? Explain your answer.