In recent months, economists caught sight of a possible downturn in the United States economy. While it may not be imminent, it still raises concerns. In particular, a recession could impact a central part of Northeastern’s educational program: co-ops. 

In July, the U.S. Treasury Department released a report announcing the first inverted yield curve since the eve of 2006 prior to the financial crisis in 2008, which was the worst recession since the Great Depression of 1929. This curve inversion serves as a market-confidence indicator. When investors have confidence in the market, they tend to invest their money in long-term bonds, but when they lose faith in the market they avoid these risky bonds. Naturally, investors become cautious and invest in short-term bonds. In practice, the interest rate of a two-year U.S. government bond is currently higher than a 10-year one. Therefore, as the interest rates on 10-year bonds decrease, so will their demand and vice versa on two-year bonds. 

We should pay attention to this change because the yield curve is the only accurate predictor of future recessions, and in the past 70 years every recession began with one or two years of an inverted yield curve. While this prediction does not guarantee a recession is waiting on our doorstep, it does suggest there is a high likelihood of one approaching. The probability of an upcoming recession within a year is now 37.92 percent, which is high considering this percentage was 10 percent at the beginning of January. 

During November 2009, the national unemployment rate peaked at 10 percent according to the Bureau of Labor Statistics. Market data suggests the economy is standing on the edge of a recession, as workers in the United States and around the world wonder if their jobs are safe from potential massive layoffs. It is to be expected that Northeastern students will also become more aware of how the recession would impact their co-ops. 

When it comes to internships, the data suggests various conclusions. Low-paid internships are said to be relatively recession-proof. However, as more people get laid off in a recession, the application pool increases and becomes more diversified because unemployed workers use internships as a way back into the market. According to University of Dreams, an internship placement agency, the competition for internships increased by more than 30 percent from 2008 to 2009. In 2009, after the last recession, the applicant pool shifted from predominantly students to both students and unemployed people seeking part-time positions to get back in the job market. This data suggests that during a recession, competition for internships will increase along with the unemployment rate.

Additionally, a study by the National Association of Colleges and Employees showed there was a marginal decrease in the offer rate for co-ops and internships from 2008 to 2009. This trend could be attributed to the fact that co-ops and internships are two forms of steady work even during a recession. Since co-ops and internships are short-term employment forms and often paid less than regular long-term arrangements, they pose less risk to the employer during a recession. Thus, co-ops and internships are relatively recession-proof based on the form of employment and data from the most recent recession. 

Even though the demand for internships during a recession might increase, NU students are the only ones who have access to some of these co-op positions, which excludes the offerings from potential candidates that are not students. This illustrates a stronger protection for co-ops compared to internships from collateral damage when massive layoffs occur.

The Employer Engagement and Career Design office is another resource students have to their advantage, as Northeastern’s program is ranked fourth-best nationally according to the Princeton Review. This resource ensures students will receive the help they need to get a co-op and a job after graduation. Considering historical economic trends and the strength of NU’s co-op program, it is unlikely that students are at any higher risk during the predicted recession.

To date, Northeastern has over 3,400 co-op offerings for spring 2020 and that number continues to grow every day. There is no significant evidence insinuating that a recession would have a large impact on co-ops, but the potential impact on the job market cannot be ignored. Co-op wages may decrease and the number of unpaid co-ops may increase, but ultimately the number of offerings will likely remain unchanged – and one of Northeastern’s greatest attractions will remain relatively unaffected.

Adrian Tolstoy is a second-year economics and business administration combined major.