Professor predicts turbulent times
Adam Llorens | Thursday, August 25, 2011
The “Notre Dame bubble” will not protect current students and University administrators from feeling the effects of recent economic tumult in coming months, finance professor Jeffrey Bergstrand said in an interview with the Observer.
“The biggest concern is the volatility that we have been seeing in the stock market. This reflects constant uncertainty and pessimism for growth, creating the possibility for another recession,” Bergstrand said. “The risks of parents losing jobs is heightened by the situation, and longer term, it means that there are prospects for our juniors and seniors heading out into the workforce to find a job.”
As the job market reels, the country’s unemployment rate reflects the turbulent economy, Bergstrand said.
“At this moment, we have a very low level of output relative to our potential, which is revealed by an abnormally high unemployment rate of nine percent.” Bergstrand said. “The United States of America’s normal unemployment rate usually is at five percent.”
He also added that the effects of the recent economic chaos are not isolated to those searching for jobs.
While Notre Dame traditionally ranks among the top universities for endowment performance, Bergstrand said administrators, particularly those working in the Office of Financial Aid, could struggle to meet previous standards.
“In the current scenario, one of the largest concerns with the stock market down affects the endowment for the University, financial aid packages, continued volatility and lower levels of wealth that correlate with alumni giving,” Bergstrand said.
As the University looks to the future in an uncertain economy, students must do the same. Bergstrand said the workplace may not be stable when current upperclassmen enter the job market in a few years.
“I think we are looking at a position for the next several years of a very high unemployment rate with very low growth,” Bergstrand said. “The reason for this is monetary policies are nonexistent and fiscal stimulus policies will not be pursued due to Congress’ concern over the debt crisis.”
Job security should be a top priority as national leaders deal with that debt crisis, he said.
“Students need to be aware that while the national debt issue is a concern for their future, that is something more important to address when we have gotten back to full employment,” Bergstrand said. “As members of society, the most important concern now must be getting back to full employment.”
As senior Matt Razzano plans for his life after graduation, the political science major said he is doing what he can to adapt to the vacillating economy.
“I think because unemployment is so high at this point, more experienced workers will definitely beat out less experienced workers for jobs,” Razzano said. “The only advantage we as students have is that they can pay us less money, but it is scary to think that many companies are not hiring recent graduates.”
Razzano also said the aspirations for political science majors to land a job in Washington might not be as realistic as it once was.