Recession -- a word that's become ever more present in economic conversations since the stock market's drop in September -- can now officially be used to describe America's economy.
And Penn State is feeling the backlash.
As news broke that Penn State's endowment declined $300 million between June 30 and Oct. 31, the National Bureau of Economic Research (NBER) announced Monday the United States has been in a recession since December 2007.
The Dow Jones industrials also closed down about 680 points Monday, while the country's manufacturing index dropped to a 26-year low, The Associated Press reported.
The Penn State endowment stood at $1.3 million at of the end of October, down from $1.6 billion only four months before, university spokesman Geoff Rushton said Friday -- the same day the NBER Business Cycle Dating Committee met by conference call.
The cause of the endowment's decline, Rushton said, has mainly been attributed to the ongoing financial crisis. But the university has "certainly done better than the markets have," he said, adding tuition is not expected to increase more than is typical.
"The big question now is, when is it going to end?" said Jean Helwege, an associate professor in the finance department.
Though Helwege said she was slightly surprised to find out the recession started as long as a year ago, she thinks there are bigger issues than a precise beginning or end.
"It's what we're living through," Helwege said. "I think I'm correct in saying people are very worried about this."
Implications for Penn Staters, she said, could include concerns over receiving financial assistance from their parents, attaining student loans, getting jobs and dealing with future taxes that may be influenced by the $700 billion federal bailout passed in October.
"It's hard to see any strong parts of the economy," Helwege said. "That doesn't mean they're not there -- they're just not obvious."
Ryan Limor (senior-finance), president of the Penn State Investment Association, said this recession came as a bit of a surprise to him because a recession is generally defined by two consecutive quarters of decline in gross domestic product (GDP) growth.
But that definition does not apply to the United States' current recession, according to the NBER's Web site.
"A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income and other indicators," according to the Web site. "Many of these indicators, including monthly data on the largest component of GDP -- consumption -- have declined sharply in recent months."
Therefore, the Web site states, the committee decided the decline of economic activity over the past year is indicative of a recession.
Alex Weller (senior-economics), president of Penn State College Libertarians, echoed the sentiment that the traditional definition of a recession is not all-encompassing. He said some sectors of the economy, like health care, are doing well, while others, like the American automobile industry, are performing "incredibly poorly."
Weller's primary concern is the declining value of the American dollar. But the rest of the world is also experiencing an economic recession, he said.
"All I know is there's still a lot of room for the economy to go down," Weller said. "Perhaps this is just the beginning."
-- Collegian staff writer Aubrey Whelan contributed to this report.
