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Wednesday, March 12, 2008

We're in a recession. What does that mean for soon-to-be graduates?

There's no "official" word that the US economy is in a recession, but it is. Justin Wolfers agrees with me (or I with him). Less jobs, an essentially nonexistent real estate market (especially around these parts), and payrolls that, according to Wolfers, "over the past three months, [...] fell at an annualized rate of about 0.1 percent," signify something's wrong.

The quotation above is especially important:

"As the chart below shows, in virtually every instance in which payrolls fell over a 3-month period, the NBER business cycle dating committee declared the U.S. economy to be in recession. Indeed, the only exceptions to this rule occurred over 50 years ago."

Even bookstores have blaring window displays for books on managing your money. While it takes six months after the fact to know if we are in a recession, the signs are obvious that the state of the economy is incredibly bleak. This, among other things, spells trouble for the hundreds of thousands of students graduating every year.

As a student who finances his own way through college, a recession puts me in a very awful situation. As debt, rent, gas prices, book costs, and tuition rise, wages remain stagnant, Social Security depletes, and the job market plummets.

Graduation nears for many students like myself, and soon we will be exulted into a recessed economy, with an average $19,000 (a 2006 estimate) in debt, and no jobs to remedy that. Where universities were supposed to alleviate these problems, they seem worsen them.

College, obviously, is not the issue. Still get an education, by any means possible. These are rather issues within the system that get placed on students all over the country. Many of us will be effectively placed into the "real" world at a major disadvantage, with negative cash flow, no way to pay it, and a Social Security system that will run its course before we're old enough to even think about it.

Instead of waiting for the economists' almost prophetic announcement that our economy is awful, we need to look towards ways to change that. We can start by putting those stimulus rebate checks right back into the economy.

1 comment:

comoprozac said...

If I can give any advice as an older guy, it would be to pay off your debt now. Even if that means living like a college student for a few more years, you'll be much happier and secure having paid off your debt before you enter your thirties. Screw the economy. Take care of your own debt.

That means use that little check from the gov to pay off your debts.