In a recent survey conducted by CNBC, about 81 percent of adults said they think that the US economy is most likely to experience a recession in these coming months of the year 2022, a few years after the rapid economic growth, downturn and recovery from the novel coronavirus pandemic in 2020.
Furthermore, with the increasing consumer monthly spending this year, it was said that this will determine whether the economy will shrink despite its downturn caused by the war in Ukraine, supply chain disruptions, and the pandemic outbursts, according to the co-founders of the Economic Research Institute.
Defining Recession: How it is related to Unemployment?
As defined by the National Bureau of Economic Research (NBER), the term “recession” means “a significant decline in economic activity that is spread across the economy and lasts more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales”.
At the beginning of a recession, many companies began to lay off employees and staff to cut losses, as they deal with the diminishing product and services demands, declining earnings, and increasing debts.
As the unemployment rate increases while the demand and output decline more, newly unemployed individuals including fresh graduates may find it more difficult to find jobs, thus, making the average period of unemployment become higher.
U.S. History: Recessions and Depressions
The United States has experienced 34 recessions between 1854 and 2020, according to the National Bureau of Economic Research (2022). Since 1980, there have been five such periods of negative economic growth that have been classified as recessions.
The most recent and well-known instances of recessions and depressions include the global recession that followed the 2008 financial crisis and the Great Depression of the 1930s. The last known recession took place in 2020 – where the coronavirus outbreak caused widespread shutdowns and layoffs across the United States.
During economic downturns such as recessions and depressions, people’s purchasing behavior becomes more complicated due to lack of financial resources to satisfy or meet all consumer’s needs. They have become more reasonable in their spending decisions and always prefer to use their hard-earned money on necessities and reduce or not buy things that they don’t really need or considered as luxury.
Moreover, due to inflation, necessities such as rent, food, and gas become more and more expensive pushing young adults to live with their parents, learn new things, and seek entertainment from games, and social media platforms instead of going out of the house.
Technology and Innovation
Technology during economic downturns played an important role in empowering and giving people a voice, particularly the most vulnerable ones. Not only that, the current advancements, and innovations in our modern technologies also enabled economists to foresee and provide extensive and real-time information that may help peoples and countries handle sudden economic shocks.
Technological advancements and innovations has helped countless job seekers worldwide. One good example of this is the development of the Internet throughout its existence. During the 1980s, the first-generation mobile network (1G) was introduced which brought analog-based mobile communication services. This had changed the way employers and job seekers communicate with one another as well as in collecting information.
Since then, with the constant demand for new services, the world has moved into the secure world of digital communications. From 2G onwards (to 5G), we developed a more digitalized way of communication, which is much more secure and faster compared to the older generation.
The impact of economic downturns such as recession paved the way for business firms to integrate sophisticated systems which are in line with the modern network technologies that the global market has offered, allowing them to further improve their operations and provide new services; hence; more job opportunities.
Suggestions for Recent Graduates
Recent studies had shown that high school graduates and dropouts experienced greater income losses than fresh college graduates when entering the labor force during an economic recession. This is much quite evident for the middle-class as recession graduates tend to earn less while working more.
In relation to health, a study conducted by Hannes Schwandt in 2019, found that “graduates had higher death rates when they reached middle age”. This increase in mortality is primarily caused by diseases associated with unhealthy habits and behaviours such as smoking, drinking, and eating poorly. They also discovered a significantly higher risk of death from drug overdoses and other “deaths of despair” among those who dropped out of school during a downturn.
For our fresh graduates, here is what you can do:
The first thing to do is to acknowledge that you are in this situation. You must face reality at some point in time. Be mentally prepared for the challenges that may be brought about by economic recession or depression (e.g., inflation, lower wages, etc.).
Secondly, try to learn new things that may improve your expertise. It is suggested that developing and improving your hard skills may increase your opportunity to find and land a job. Be knowledgeable about the technological tools and software that are currently on trend.
- For designers: 3D Modeling
- For game developers: Unity 3D and Unreal Engine
- Engineering: Autodesk, AutoCAD, and BIM
Last but not the least, is to get into the thriving industries. At the onset of a recession, as a fresh college graduate, it would be wiser not to be picky and choosy about jobs. There are some industries that some studies would like to indicate as “recession-proof”, and here are some of them (According to Investopedia):
- Food Groceries and Restaurants
- Discount Retailers
- Freight and Logistics
These are just a few of the industries that are least affected by economic recessions, and you should keep an eye on them.