Even though the US is one of the most developed countries worldwide, following a free market economy has the world’s largest net wealth and nominal GDP, its economy is slowly shrinking as we enter the month of August in 2022. The economy in the US changing and if you’re an international student willing to pursue a career or work in the US or are already studying or working there, this blog will cover some implications and prospects of the latest economic trends in the US.
Current US Environment
The Challenge of High Inflation
It’s not something new, rather it’s then a recurring event of the past. Yes, I am talking about inflation. The problem of inflation is elevated globally, but the US has seen the highest rate of inflation in the last few months when prices have been increasing gradually anywhere from 7 to 9 percent on the actual costs. The gas prices are up by 30-40%.
After over 10 years of below-target inflation, the quick exhaustion of slack, rising energy costs, and progressing worldwide stock disturbances have led to a significant rise in inflation. The pandemic had already left the government with larger deficits and debts. Now, the cutthroat prices just keep making it worse.
Major economies are declining in the US as the GDP continues to fall. It’s not evident in terms of employment and unemployment today. The unemployment rate in the US is still low, and there are jobs out there that don’t sum up to the conclusion of a recession occurring, but the overall growth has slowed and continues to slow.
Furthermore, the Federal Reserve is increasing rates because they want the economy to slow down, consumption to get reduced, and investments to get reduced due to higher interest rates. They are going to continue changing that until things do slow down and the inflation comes down.
Price Pressures & Wages Inclining
So far with the inflation rising, wage pressures that were initially visible in low-skill occupations have spread quickly across the economic structure as firms struggle to fill vacancies and employers switch jobs or are laid off at a growing intensity.
With the US supply chains disordered, the traditional recession countermeasure of putting more cash into the customer’s pockets keeps adding more ripples to the already intense price pressures. Even the stock market has seen a significant downfall compared to what it was, last year.
The Technology Industry and certain segments of the stock market are down 70-80 percent compared to the peak performance. The same stocks that were hiring employees at an increasing rate last year are now suddenly laying off people in huge numbers.
Is The US in a Recession?
It was technically announced last week that the US is in a recession which is two-quarters of negative GDP with high inflations, undercut consumer spending, and interest rate hikes. All of these factors prove that prices all across the US will remain persistently high and the US interest rates will face aggressive increases. The dollar rate also has seen an upsurge during this moment. The Feds have increased the interest rate by three-quarters of a point for the second time in its most aggressive drive to tame inflation which has been growing rapidly over the last three decades.
Typically, recessions come through with high job losses and high unemployment but that isn’t the scenario in the US. With the inflation high, wages continue to grow as living costs increases nationwide.
So to answer the question, technically it is going into a recession but in reality, there’s no substantial evidence to show statistics of any kind of recession occurring. Whether the US is technically in a recession or not doesn’t change the fact that the Feds have their work to do and that they’re doing it committedly.
They want to curb the economic growth, for now, to transform it into a sustainable economy without tipping the US into a recession. They are going to do everything they can to avoid this recession but their prime objective is to bring inflation down and achieve an economy that has a 2% inflation. Biden adds that even though they are facing a historic global challenge, they are on the right path and will get through this transition stronger and more secure.
Should You Be Worried?
If you’re an international student who’s looking at flying out, you must wonder “what happens when I’m graduating or looking for jobs after finishing my studies in the US?”, “Do they become worse or do they become better?”
None of us know for sure, but what we do know is that in 2023-
- The economy will slow further- Don’t fight the feds, whether they’re trying to push the economy in the positive direction or they’re trying to create a negative impact.
- Companies will reduce costs and decrease investments as profit margins come under pressure. This in turn will also reduce the US job market as employment will slow down.
- Job Openings will decrease- The major companies are already laying off workers and are working with a limited or lesser workforce with a lower paycheck, which means there won’t be many people willing to apply for those jobs.
- Layoffs will increase- The process has already begun. As the US gets into Q3, Q4, and the next year, layoffs are going to be there.
- Employees will stay put- Many of the employees and workers who have a job are not going to be switching over and jumping ships which has been a very common practice since the pandemic.
Impact on International Students
To summarize, what all of this means is that new hiring will be under pressure, with an impact on international students. If they’re not too many job openings, how do you find a job? The most important reason why this creates a negative impact on international students is that as an international student you are on either OPT or at some point requiring H1B which is not easy for companies to get approval from when they already have internal layoffs. International students are the first ones to get impacted as things change in the economy.
Don’t Stress About It
The economic expansion has gone on for a very long time in the US but things are turning and they will continue to turn, so if you’re an international student, there will be impacts on you as you come to study but what we will suggest you is not to stress about it.
If you have the attitude of going to the US to study, staying there, and getting some experience there, you’ll find a way to stay and find a job whether it happens after graduation or it happens some other time. If you have that willpower, the way will be created for you because that’s what has happened over 40-50 years irrespective of the visa policies, economic cycles, and employment trends.
There’s some stress as you think about it when you go to the US, as you fly out but this stress and problems should never drive your future aspirations as you will find a way to become successful. Millions of students have gone to the US, stayed there and done well in their lives, and have gone on to become very successful in their careers. And if they could do it, so can you!
What Can You Do About It?
As you go to the US and start your college education, you always have to remember that you have no control over the way the situations and problems play out, what you can control are these things:
- Take classes in areas where there will be jobs: You’ll always have to keep thinking about where the jobs are. What those jobs are? What skills, background, and experience are required for those jobs? You need to take classes in those specific areas to increase your success rate of getting a job right after graduation.
- Increase your study duration: If you don’t find a job, you can always try to delay your graduation because of visa rules by a few months or one semester. You can do this by taking up additional vocational courses related to your subject. This may require more funds from your side but at least you get the opportunity to continue building your skills while you look for a job while you wait for the economy to improve.
- Gather contacts: Jobs are always filled through your network and knowing where and which companies are hiring, and the recommendations they may get from internal employees. We suggest you meet other students, especially international students who are your seniors and get to know them as soon as you start your course because as they graduate and go work somewhere, you keep those relationships, and when you’re the one looking for a job, they will be the ones to help you find one.
- Be Ready for change: Always be ready to move after graduation to cities where there are jobs. We always suggest students study at a university in a city where there are a lot of opportunities and job openings. If that is not the case for you, then you should be ready to pack up, find a space to stay and live and go look for a job locally.
Free Webinar on Changing Economic Headwinds in the US
Tune in on our free webinar on the 6th of August at 7:30 IST to get financial guidance regarding the latest economic trends for international students flying out to the US
Offers For You
Here’s something that we are offering to students who are going to study in the US, in partnership with a US-based company called Ellis. We can help you open a US-based bank account, get an International Visa debit card along with a US-based sim card (all Federally Insured) from the comfort of your home and you’ll be getting all of these benefits before even setting foot in the US. You can sign up today and get free $10 as a sign-up bonus by using the referral code: STOODN.