Mish had an excellent post today on layoffs and the economy (see Job Cuts Increase Economic Stress). In that post he focused on the most recent spate of job cuts and what that means for our economy. I agree with Mish, and many others, who have pointed out that unemployment is a lagging indicator of recession. Therefore, not only can’t we rely on unemployment statistics to predict when we will enter a recession, but we can’t really look to unemployment statistics to gather insight into when we’ll come out of a recession.

However, that’s not what I’d specifically like to write about today. The focus of my post will be on how this recession has affected the job prospects of graduating MBA students, and how current students are likely to be affected moving forward.

Interestingly, few Stern students had difficulty finding jobs or had offers rescinded. In fact, most of them seemed to have weathered the storm just fine (for now at least). Nevertheless, I found the article Tips for College Graduates Seeking Work from yesterday’s Chicago Tribune fascinating. The column began:

It could be a long summer for college graduates looking for work…Although the college labor market could remain positive overall…some companies have rescinded offers. Other employers that delayed hiring may continue to hold off on recruitment through the summer.

I will not argue with the author of this article. I mostly agree. However, some of this information seems at odds with the data as I experienced them here at Stern. Let me explain why.

Earlier, I suggested that Stern students did just fine this year. And that’s true. In fact, none of my 150 or so students had a job offer rescinded, and most of those who were seeking employment found it relatively easily. But to understand why, you must understand the hiring cycles at Business Schools.

For the most part, the recruiting season begins in the Fall. It is usually finished by early Spring. So many of the students I had spoken with were locked in early on – they had accepted job offers in Fall 2007 and Winter 2008. By the time the real turmoil began (after the Bear Stearns collapse in March, 2008), most of my students had already been hired, as were, I suspect, graduates from most business schools.

But it’s true that it will be rough going for those who graduated without jobs, and even some of those who graduated with jobs (i.e., some will show up to start their new jobs only to find out that they don’t exist anymore). But the overall numbers for the graduates of 2008 will largely look ok. Unfortunately, they don’t tell the whole story. They are also a lagging indicator.

The students who will really, truly feel this recession are the graduates of 2009 (and maybe even the graduates of 2010). I expect the job market moving forward to be abysmal, and for the hiring season of 2008-2009 to largely be a bust.

In April, BusinessWeek published a wonderful section on the employment outlook for 2008 business school graduates (see Graduating Into a Recession, and especially the article It’s Looking Grim for New Grads). I’d encourage you to take a look – there are some neat facts in there about the earnings potential of those who graduate during recessionary periods. In the section they claimed that the goings would get tough for 2008 grads. Personally, I think they were slightly off on timing. We ain’t seen nothing yet.

So fear not for the grads of 2008, but for those of 2009, …and beyond.