However, finding a job will not be easy – the unemployment rate is much too high – nearly 10 percent. And the recovery seems likely to be more sluggish than we would like. The economy is suffering from the hangover of the real estate and consumption boom that ended a few years ago. That boom collapsed beginning in mid-2007. The result was a very deep downturn from which we are now only emerging. Although the Federal Reserve has been aggressive about easing monetary policy to support economic activity, the recovery is not likely to be as robust as we would like for several reasons. First, households are still in the process of deleveraging. The housing boom created paper wealth that households borrowed against. This pushed the consumption share of nominal gross domestic product to a record high of about 70 percent. When the boom turned into a bust, those paper gains evaporated. In fact, many households now find that the value of their homes is less than the amount of their mortgage debt. This has created a difficult time for many families and has caused the hangover to last longer. Second, the banking system is still under significant stress. This is particularly the case for small- and medium-sized banks that have significant exposure to commercial real estate loans. This stress means that banks have been slow to ease credit standards as the economy has moved from recession to recovery. Third, some of the sources that have supported the nascent recovery are temporary.
The big swing from inventory liquidation during the recession back to accumulation will soon end as inventory levels come back into better balance with sales. And fiscal stimulus from the federal government is subsiding and will soon reverse. Coupled with the benign outlook for inflation, these headwinds to growth and employment explain why the Federal Reserve is keeping short-term interest rates unusually low. We want to do all we can to support more rapid economic and employment growth, subject to keeping inflation low and stable, and inflation expectations well anchored. The situation has improved and total employment is now growing – for example, U.S. payrolls rose by 290,000 last month. But we are still far from where we want to be. In this environment, finding a job will be tough, but when you hit the pavement remember that the job market is improving. Don’t get discouraged. Get your foot in the door by doing something productive, even if it may not be exactly what you want to do for the rest of your life. Gaining knowledge and experience is what is important at this point. The first job out of college is a foot on the ladder – the job doesn’t have to be perfect to be valuable to you. A bit of advice In terms of your career, my first bit of advice is: don’t rush. There is plenty of time for your careers to unfold. It’s not a sprint, it’s a marathon.