CHICAGO--(EON: Enhanced Online News)--In the September issue of Themes on the Economy®, Mesirow Financial’s chief economist notes that, “Household formation tends to rebound slowly… Why do we care? Because household formation determines the number of homes built and that affects employment.” As it is, job creation has been much slower than needed to restore the number of jobs lost to the Great Recession. And, if not for those who have given up looking for work, the scenario would appear even worse. Diane Swonk says, “The unemployment rate would be about one percent higher than its current 7.3%, if those who usually participate in the labor force were confident enough to look for jobs.”
“The unemployment rate would be about one percent higher than its current 7.3%, if those who usually participate in the labor force were confident enough to look for jobs.”
Disappointingly slow economic recovery is starting to show a silver lining for some people: new college students. It all boils down to supply and demand; constant tuition increases are difficult to sustain when parents and students have less to spend on education. Swonk observes, ”…many of the top-tier schools are finding that they must provide financial incentives to win over the best students… eventually, however, costs will have to be adjusted and tuitions cut.”
Even the recent uncertainty about policy direction at the Federal Reserve may be an overreaction to the much-publicized personnel changes coming at the top. As a long-time Fed watcher, Swonk says that sudden, sharp turns in the current, unconventional monetary policy are very unlikely. “Institutional momentum is a powerful force at the Fed and, barring a major acceleration in growth, it will be tough to turn this battleship [the Fed’s balance sheet] around quickly.” So no matter who is the next chairman, Fed officials expect easy monetary policy to be around for some time.
Mesirow Financial is a diversified financial services firm headquartered in Chicago. Founded in 1937, it is an independent, employee-owned firm with approximately 1,200 employees globally. With expertise in Investment Management, Global Markets, Insurance Services and Consulting, Mesirow Financial strives to meet the financial needs of institutions, public sector entities, corporations and individuals. For more information about Mesirow Financial, visit its website at mesirowfinancial.com.