Sudeep: The American economy is in a recession.
The housing bubble has burst, credit is tightening and oil and food prices are at a historic high. As a result, economic growth has slowed down. Unemployment has hit 5.1 percent and an average of 80,000 jobs per month have been shed since December. Will this affect the almost 1,500 Tufts students entering the job market this year? In short: Yes, and it's gonna hurt!
The industry hit hardest by this recession has been finance. Almost 34,000 employees on Wall Street have been laid off in the last nine months. Tufts sends a considerable portion of its graduating class into finance, and it seems likely that these aspiring bankers will struggle to find jobs. Many other private sector jobs are also tied to Wall Street. These too have taken a dip. As the recession progresses, we can expect more and more graduating students to feel its brunt.
And it's not only that they will find it harder to get jobs - their wages will also be much lower than they would have been otherwise. Last month, the weekly private-sector wages rose at the slowest pace in years. Even if they do find employment, Jumbos will have to settle for less money.
This recession is going to hurt more than just our graduating seniors and grad students. The International Monetary Fund has predicted that the economy will be 0.7 percent smaller at the end of this year than it was in 2007. Though the economy will get better in 2009, its expected growth rate will be well below normal. Moreover, crashes resulting from housing bursts in rich countries last four years on average. After the crunch, the economy is usually 8 percent smaller than it would otherwise have been. This means that all upperclassmen and most underclassmen will have a harder time finding jobs and making money once they graduate. It's not only the class of 2008 that's in trouble - we all are!
Peter: The economy has been taking a beating. But don't throw in the towel yet - even if the United States doesn't immediately recover from its funk, Tufts students will not be bearing the brunt of a recession. For starters, about 80,000 jobs have been lost per month since the end of 2007. That number is substantial, certainly, but still much shallower job losses than have been seen in recent recessions.
Although finance has shed thousands of jobs due to the credit crunch, some of the largest losses have been in construction and manufacturing labor markets - industries most Tufts seniors are unlikely to enter after graduation. And unlike past recessions, the government has wasted no time springing into action, cutting interest rates and pumping $150 billion into the economy with a stimulus package. There are even a few bright spots in the American economy, including rising exports lifted by growing world economies and a booming tourism industry (even if it is being stimulated by the weak dollar).
Housing woes are dismal for those who owe more than their home is worth. But graduating seniors will most likely enter into the home market with prices down substantially from their pre-recession peak.
Tufts graduates have another advantage: location. The recent Beige Book released by the Federal Reserve Bank shows that Boston is one of the few districts that did not recently report slowing economic activity. That being said, the economy could get a lot worse. Fortunately I don't have to worry; journalism doesn't pay well either way.
Sudeep Bhatia is a junior majoring in philosophy; Peter Radosevich is a junior majoring in political science. They can be reached at Sudeep.Bhatia@tufts.edu and Peter.Radosevich@tufts.edu, respectively.
