US GDP decline indicates potential recession

Possible 2022 recession may impact college students

ABIGAIL CAVIZO / NEWS EDITOR / THE USD VISTA

For the first time since 2008, economists fear a recession. A recession is a decline in economic activity that can result in higher housing prices, unemployment and market inflation. Typically, a recession can be measured by the Gross Domestic Product (GDP): the financial value of goods and services that a country makes in a given year. If the total monetary value of goods and services grows, then the positive GDP number is a sign of a country’s healthy economic growth. Recently, the GDP shrank for the second consecutive quarter in a row, which is the tell-tale sign of an approaching recession.

Due to COVID-19, many economists expected this to happen. Since almost everyone stayed home and spent little money, the economy needed to readjust to the way things were before COVID-19. When the U.S. first declared a nation-wide lockdown in March 2020, there was a two-month recession. Although it was the shortest in U.S. history, it was one of the most severe, lasting from Feb. 2020-April 2020. 

What separates this recession from previous ones is the unemployment rate. Unlike prior economic downturns, the unemployment rate is doing well. According to the U.S. Bureau of Labor Statistics, California’s unemployment rate is at 4.2%, and the national unemployment rate recently lowered to 3.5%. The highest unemployment rate the U.S. has ever experienced occurred during the pandemic in April 2020, at 14.7%. During the recession of 2008, the unemployment rate peak was 10%. With the unemployment rate steady at present, the job market is still plentiful for recent college graduates. 

USD economics professor and accomplished economist in Southern California, Dr. Alan Gin, explained that although the employment rate is currently healthy, his concern would be for the classes following the recent graduating class of 2022. 

“The unemployment rate is still really strong, so that’s a good sign against a recession,” Dr. Gin said. “For the future classes graduating in December of this year or May of next year, the labor market is changing.”

He also advised that even if students wanted to look into a career where there will always be opportunities and jobs to fill, choosing a viable major for these recession-proof jobs doesn’t need to be stressful. 

“I believe that the U.S. economy is strong and there will be [enough] job openings in the economy, that you don’t need to work in a job that you’re majoring in,” Dr. Gin said. “If you did want something sustainable in the market, the technology sector is really strong. Degrees that graduate with science, engineering, or computer science are very plentiful choices.”

A recession-proof job means the worker will still be needed, regardless of the economy’s state. These jobs always have a demand for labor. In today’s world, the technology field always has a place for more people. Another example of a recession-proof field is the medical field, such as nurses and doctors. 

USD junior, Madison Ago, described the pressure that comes with going into the workforce during a possible recession. 

“Last year I switched my major from business to political science, but I don’t regret my decision, even if a recession is in the near future,” Ago explained. “I’d tell my undeclared, freshman self that it’s okay to not know what you want to do even if the job market shrinks, because just having a bachelor’s degree gives you a leg up.”

Employment rates aren’t the only way college students are impacted by a recession. Some are concerned how those taking out loans for higher education will be affected. In general, recessions are not an advisable time to take out loans. During the last recession of 2008 — otherwise known as the Global Financial Crisis —  Americans all across the country were in debt. However, loans are not a choice, but a necessary investment. For some students, aid for higher education is the only path. Paying for college out-of-pocket is not an option for all students. At USD, 77% of current undergraduate students have some form of financial aid, including loans. 

USD Strategist, Analyst, and Adjunct Economics professor, Dr. Deborah Kelly, determined that student loans at USD should be viewed as a long-term investment.

“It’s tough to have to take out loans, but you get a lot of benefits and it’s not [the] debt, but rather a trade-off for a good education,” Dr. Kelly said. “Yes, you’re paying more and taking out loans, but you get so much more opportunity-wise which is what’s going to help getting jobs in the long-run with connections and networking.”

Dr. Kelly also gave advice regarding her experience during the recession of 2008. 

“It was really bad with the unemployment rate reaching the higher end of 7%, but we need to remember that our economy can make it through that and it’ll make it through this,” Dr. Kelly explained. “There’s going to be a recession, but the job market is what’s going to get us through it with opportunities like remote work, which is unlike the 2008 recession.”

Although it is the first time Generation Z is experiencing something like this in their adult lives, the U.S. is no stranger to harrowing economic downturns. It’s important to note that a modern-day downturn in the economy would not affect the country as badly as the recession of 2008. Unemployment rates make it hard for workers to land jobs and provide for themselves during tough times, but the current, balanced employment rate and the addition of virtual opportunities in the job market provide a safety net for the working class. While people should be mindful of their spending habits, a 2022 recession is not something to worry about.