The June unemployment rate staying at 8.2% is really not a surprise. The economy is lackluster and the 80,000 jobs added, a number well below what would be necessary to reduce the unemployment rate, is all the economy is capable of generating. Of greater concern and regardless of the November presidential /congressional election results, the economy will not quickly spring to life with a major decline in the unemployment rate.
As I have noted previously, if you look at the economy at the state and local level, part of the reason for the lackluster economy becomes clear. States and localities are still in the process of cutting back. Whether it is caused by escalating pension and health care costs or by tax caps, the number of positions is declining and the concern about still more positions being eliminated is escalating. The immediate impact plus the natural caution regarding the future that accompanies situations like this are clearly a brake on economic recovery.
A much more interconnected economic world is also a brake at this moment on the US economy. The economic situation in Greece and other European countries must lead to greater austerity measures in those countries and that certainly won’t help our exports. Plus the continuing political instability in the Middle East also is potentially counterproductive to economic recovery.
And I haven’t even mentioned the tax increases that are already programmed to take effect on January 1. 2013. If Congress and the White House don’t get their act together and resolve the tax increase and spending issues, we are headed with certainty for a much more serious economic crisis and a new recession; a recession that will take place long before we have fully recovered from the last recession.
For all of us in higher education, we clearly know the impact the economy has. From endowment earnings, to fundraising, to the ability and willingness of our students and their families to pay tuition or take out loans, to government support, to placement statistics, we are vulnerable. Since the recession of 2008, higher education has dealt with greater resource constraints. I don’t think that we should expect any change in the short term in this constrained environment and I consider myself to be an economic optimist.
An out of the area colleague noted that he welcomed these difficult times because he is able to do more with less. If that is the case, other than at the margin, this colleague is running an inefficient operation. For almost all of us, fewer resources means we are able to do less. That doesn’t mean we aren’t able to maintain quality in what we do. But no one should underestimate how difficult this is, and everyone should remember that maintaining quality works best if there is continuing faculty and administration cooperation and collaboration.