Graduates of the Class of 2012 began their baccalaureate studies at the worst time during our nation’s economic history since the Great Depression. Today marks the 4th anniversary of the bankruptcy of Lehman Brothers, the largest bankruptcy in American history – and by some measures the start of the 2008 recession.
The collapse of Lehman is when unemployment in the economy really started to rise, and when global credit markets began to seize.
You can see how this selection of stock market indices began to collapse after the fall of Lehman brothers. Graduates of the class of 2009 had one of the toughest job markets ever. At the height of the recession there were 6.1 million job seekers for every posted opening in America, things are better today but the ratio is 3.5 million to one (WSJ).
Four years on, the job situation in America is still tough. People are working harder for less money, and there is a great deal of uncertainty going forward. The Federal Reserve has started a third round of Quantitate Easing this week, seeking to drive corporate borrowing. But with ultra low interest rates, and record levels of cash on corporate balance sheets, I’m fearful that this will just lay a stronger foundation for inflation in the future. Our economy might already be falling off of a fiscal cliff.
If the Fed wanted to spur economic growth why not lend directly to State and Municipal governments for capital projects?
To make matters worse, there has been little meaningful reform in the financial sector. Dodd-Frank lacked provisions similar to Glass-Steagall, and it has yet to be fully implemented. The nation’s banking sector has become even more concentrated as banks failed or merged, and they fought hard to prevent over regulation. Last May Rolling Stone published a sacthing article about Wall Street’s fight to end regulation.
Mark Zandi, the Chief Economist of Moody’s Analytics, predicts that unemployment will still be at 6.6% in four years (according to NPR). This past financial crisis was especially hard hitting because it was a financial and real estate driven binge that took nearly a decade to fully form.
It’s no surprise then, that it will seemingly take a decade to return to our pre-crash normal. Until we do thoughFor all those job seekers out there, you just need to find ways to make yourself indispensable.