Unemployment Rates Will Continue To Rise For At Least A Year, N.C. State Economist Projects

This story was written by Alison Harman, Technician


Although August's unemployment rate held steady into September -- both months showed a national unemployment rate of 6.1 percent, statistics from the U.S. Bureau of Labor Statistics indicated -- economists like Michael Walden, a North Carolina State University professor of agriculture and resource economics, don't expect the rate to stay high for long.

The unemployment rate, which includes data from Americans age 16 or older, has steadily increased since November 2007 with two exceptions -- unemployment rates for February and April decreased by .1 percent. Since last November, the Bureau of Labor Statistics has found that the number of working-age Americans has increased by 1.4 percent.

That means those graduating in December or next May could have a harder time finding full-time jobs, Walden said.

"We'll expect to see high unemployment rates for another year to a year and a half," he said. "We're in a recession. The economy is producing less and that causes more people to be out of work, which causes incomes to fall and profits to fall."

But a recent report from the National Association of Colleges and Employers has a different outlook.

Although 52 percent of polled employers said they plan on hiring fewer college graduates from the class of 2009, the report states there will be "very little growth over the hiring levels for the class of 2008, but no expected decline."

In an August voluntary response survey, NACE used 146 employers. At the time, respondents reported plans to hire 6 percent more new college graduates from the class of 2009 than they had in 2008.

In the same poll, one-third of the respondents planned to hire fewer college graduates than they had said in earlier polls.

The updated job outlook poll found that 52 percent of respondents said they planned to hire fewer college graduates in to 2009 recruiting season than from the class of 2008. 34 percent said they expect to hire more graduates, and 14 percent said they expect to hire the same amount of graduates as from the class of 2008.

Career counselor Leslie Rand-Pickett said the study's results are a "good indicator" of the projected hiring environment. However, she said registration for career fairs has been strong this semester.

Walden attributed the economic recession to a the same crash in the housing and financial markets that pushed the stock market into volatility.

"Stocks tell us what companies are worth, and when their profits are falling, stocks are worth less," Walden said. "When companies are performing poorly, they reduce costs by cutting employees."

So unemployment rates, he said, will continue to rise for another year to a year and a half before they begin to fall due to a "natural cycle of the economy," in which the recession "runs its course" and business conditions start to improve.

"At some point, investors will decide that investments are at bargain level. This gives businesses more money to produce more and hire more people," he said. "There will have to be a change in attitude because the stock market will have fallen by so much that enough investors will feel like it's a good buy."

Until this change in attitude occurs, Walden said graduates will find that their employment prospects are not as good as they would have been a few years ago.
  • CBSNews

Comments

CBSN Live

pop-out
Live Video

Watch CBSN Live

Watch CBS News anytime, anywhere with the new 24/7 digital news network. Stream CBSN live or on demand for FREE on your TV, computer, tablet, or smartphone.