Despite nationwide effects of an economic decline, the local economy is booming, UH economics professors said
"You don’t have to be an expert in economy to know that a recession is slowly taking place in the U.S. Clues such as unemployment, oil prices going up and a downturn in the stock market are becoming more noticeable as people are the ones suffering the consequences," Spanish junior Daniela Gomez said.
Professors said the country’s economic activity is declining and if the trend lasts two or more successive quarters of a fiscal year the country could be headed toward a recession.
"The U.S. is in the beginning phase of a recession. It takes two quarters of this type of slowdown before you can say that the nation is in the recession.† Houston is not in a recession, but is growing at a very strong pace," urban economics professor Barton Smith said.
While some professors said they believe a recession will happen, others think the current slowdown may be, at best, a mild and brief recession that will improve soon.
"The economy may suffer a short period of negative growth, which may qualify as a recession. It should begin recovery shortly," economics professor Paul Gregory said.
The two major contributors to the slowing economy are the subprime mortgage crisis, which offered adjustable interest rates to consumers with flawed credit records, and the U.S. housing market correction, which would have financially underwritten the changes in the economy because of the slump in mortgage rates, The New York Times reported.
The subprime crisis should be mostly old news by the end of the year, but other financial crises lurk ahead, such as rising unemployment rates for both blue-and white-collar workers, Smith said.
Another indication of the slowing economy is employment numbers. The Department of Labor estimated 63,000 jobs were lost in February in the U.S. It was the second consecutive monthly decrease, and the third consecutive descent for private-sector jobs, the New York Times reported in March.
For graduating seniors, availability in the job market is narrowing.
"A recession means a less-vibrant job market, so seniors graduating will face a tougher market. Even during the recession, if we have one, the unemployment rate will remain moderate compared to past recessions," Gregory said.
Though the declining economy could negatively affect graduating students seeking jobs, it is not an indicator that enrollment in coming semesters will decline.
"We haven’t seen the impending recession play a factor in our admission applications yet, but we do monitor these numbers daily to keep abreast of projected enrollment for the fall," Associate Director of Admissions Jeff Fuller said.
Economics professors said debate is no longer focused on whether there will be a recession but rather on how long it will last. They said it is an indicator that creates predictions about what will happen next.
"I believe that we’ll have a mild recession this year and a frustrating couple of years afterward in which the recovery is painfully slow," Smith said. "Houston will slow down also, but will not stop growing. As long as energy prices remain this high, we’ll still get quite a boost out of energy sectors locally."
Additional reporting by Sara Alvarado.
