Discussions about a potential economic recession are intensifying as job market fluctuations and stock market volatility dominate social spheres. The implications of a recession are being debated amidst these economic changes.
Social media users have joined the debate with the hashtag #RecessionIndicators trending on X as people speculate what these signs mean for the economy. For students, the implications could be far-reaching, potentially affecting education funding, career prospects and financial stability.
Mehmet Caner, a Thurman-Raytheon distinguished professor of economics, said a key indicator in predicting an economic recession is the stock market.
“We’ll see a freeze in the markets,” Caner said. “And I think already the University of California already had a freeze in hiring. Our school here might have a freeze in hiring too. It plays case by case. So it’s already there. The effect is already there.”
NC State has been under a hiring freeze for faculty and staff positions since Feb. 14. Warwick Arden, executive vice chancellor and provost, wrote in the memo announcing the freeze that “uncertain impacts of the presidential administration’s executive orders and guidance” and “financial challenges” were the driving forces behind the freeze.
Charlie Clarke, an assistant professor of finance, said the stock market’s drop is the first sign of an economic recession.
“If you look back, almost always the stock market’s gone down before or in the early stage of a recession,” Clarke said. “But just because the stock market goes down doesn’t mean we’re gonna have a recession, right?”
Clarke said, along with the stock market, job reports are vital to predicting an economic recession. He said the more the job market shrinks, the more signs point toward a recession.
“We want hard data,” Clarke said. “There’s a reason everybody focuses every month on the new jobs reports, because one of the first places we see an economic slowdown is in less hiring.”
Clarke said the shrinking career pool during a recession could have major implications for students going into the job market right out of college.
“One thing we know is that recessions can hit students who are going on the job market hard, meaning, if you graduate in a big recession, it’s gonna be harder to find a job,” Clarke said. “The sad thing is that, if it’s hard to find a job, the average job someone will find will be a little bit worse than it could have been in a good economy.”
Caner echoed similar sentiments about the job market worsening during a recession.
“I expect the job market to be not so good, generally speaking, both in the finance sector, the academic sector and the tech sector, it will be less,” Caner said. “If things reverse in a month, who knows? So it’s very well titled, and that’s the whole point.”
Caner said a recession could lead to cuts in student financial aid and University funding.
“There might be cuts in anything related to [University funding], and it might affect the graduate students,” Caner said. “Who will pay their fees? Do all these graduate school fees and the professors pay it? But what if they don’t want to?”
Caner expressed concern for the implications that come with an economic downturn.
“After seeing these last two days, it looks more likely to have a recession in the short term,” Caner said. “In the long term, we don’t know; next year, we don’t know. Maybe things will stabilize.”
When predicting recessions, economists look at data ranging from a few months to a few years to predict the future and the current state of the economy. Clarke said these indicators will not be able to accurately declare a recession in today’s economy for at least a few months, or even years.
“If I’m teaching my class, I would say we entered a recession in December of 2007,” Clarke said. “But I can show you the forecast from forecasters in the second quarter of 2008, and they’d have no idea we’re in a recession.”
Clarke said this uncertainty when predicting a recession leads economists to disagreements and sometimes produces inaccurate predictions.
“If we’re going to enter a recession in the next year, we’ll be arguing about whether we’re in a recession for the next two years,” Clarke said. “That’s just the state of macroeconomics. It’s very hard to know what’s happening in real-time.”
Clarke said there are actions students concerned about a potential recession can take. He said debt is a friend to students during their college years, and they should not be afraid of it.
“Take on debt now,” Clarke said. “Don’t feel bad about making that person place slightly higher student loan payments if it makes your life easier today when you’re 20 or 21. That’s the purpose of borrowing for college.”
Clarke said students can also invest in themselves. He said by studying hard, building relationships and using Career Services, students can ensure their success in times of economic uncertainty.
