By Josh Hayter

Students have no idea what’s going on in the economy.

Downtown distractions and diligent studies keep them from seeing what’s going on in the real world. And according to Bloomberg economist Richard Yamarone, the real world is scary.

Yamarone is an economist with more than two decades of experience forecasting U.S. economic statistics and trends. He is the author of “The Trader’s Guide to Key Economic Indicators” and is the creator of the Bloomberg Orange Book, which is a collection of comments CEOs and CFOs made on quarterly conference call transcripts.

He addressed over 200 students and faculty Thursday afternoon at the 30th Anniversary Streich Lecture in Dillard. His objective: bring as many members of the audience as possible to the “dark side.”

“How many people here actually believe we’re headed for a recession by year’s end?” he asked.

Silence from the audience. Not one hand was raised.

“I’ve been sent from Lord Vader to bring you to the dark side,” Yamarone joked. “Clearly too much happiness going on here. Too much disbelief. Too much optimism. We don’t like that on the dark side.”

Yamarone gives the same speech concerning economics in 88 cities and there are only three places where he doesn’t get people to raise their hands to come to the “dark side.”

Texas is one of those places because oil is doing well and both the energy and drilling sectors are booming. But for the country overall, things aren’t looking good.

“You’re all taught that when GDP falls negative, below zero, the economy’s in recession. That is true,” he said. “However, I’m here to tell you it only has to get below two percent.”

America has been sub-two percent for three quarters in a row now.

It may not happen in the next three quarters, but by the fourth quarter the country will find itself in a recession, Yamarone said.

It’s happened that way every time since 1948.

How does Yamarone identify a recession?

“By looking at employment the only thing that matters is whether you have a job or not and if that job can support your family,” he said.

“That’s what we want to do. We want to work hard.”

Jobs are the most important economic indicator there is, he said.

“There’s nothing more powerful than when you’re in a society that’s identified by what you do,” Yamarone said. “You go to a bar and the first thing you ask someone is ‘What’s your name? The second thing is ‘What do you do?’ That’s just the way it is.”

With unemployment around 14 percent today, it’s easy to see why many Americans live in fear.

Though firing has stabilized, people are being hired at a fraction of the pace they once were.

On average, unemployment lasts eight months and the length of unemployment benefits continues to climb.

“We’re led to believe (by the me dia) that this is just people sitting at home watching Oprah eating bonbons on the couch cashing checks. It’s not that way,” he said.

“It’s a lot worse than that.”

It means someone’s out of work not making payments on the bills.

For the first nine recessions after WWII, it took an average of 11 months for the recession to end and 20 months to get the jobs back.

In those days, manufacturers would fire up idle plants and factories, hire up workers and bring them back.

“That was when we used to make things,” he said.

Today, it takes eight months to restore the economy but 40 months to get jobs back, Yamarone said. That’s because America is more of a services oriented economy.

“We invent, design, develop, engineer and create,” he said. “We’re the brains.”

Then we send it off for another country to manufacture because they can do it for cheap.

Factories aren’t running and people are not employed. That’s a problem.

Not bringing home an income is more than an economic problem. There are also psychological socio-economic consequences, Yamarone said. Self-worth and feel-good are hurt. Suicide and murder rates both go up and depression is notorious when the economy is down.

Many find that when they do get a job, they’re not getting paid as much as they were in a previous job. It can be very discouraging.

Both the housing and auto industry are trending lower. There are over 15 million vacant homes on the market.

The internet is wreaking havoc on the retail sector. People don’t have to buy products at the store any longer because they can get what they want online. Mall vacancies are at an all-time high. Workers and services are being slashed.

“The internet is changing the landscape of the economy,” Yamarone said.

The Misery Index or the combination of inflation and unemployment, is higher than anytime since 1983. After paying bills, people have no real income left.

“The real disposable personal income used to be at 3.7 percent. Now we’re at zero,” Yamarone said. “You can’t spend what you don’t have.”

There are no perfect Holy Grail economic indicators, but Yaramone gave what he called these “Fab Five” to look for.

People don’t dine out as much during hard times. If they do, they choose McDonald’s rather than the steakhouse. They buy less jewelry and cut down on cosmetics and perfumes. They don’t go casino gambling as often. Not when times are tough, he said. But, the greatest economic indicator, he said, is women’s dresses.

“There’s no greater self-purchase of a woman than a dress,” Yamorone said. “The woman is the CEO of the household traditionally (and) when things get tight around the house, (she) postpones a self-purchase. Watching women’s spending habits will tell you everything about the economy.”

“So what can we as college students do now?” one audience member asked. “What can we do to learn more about the economy?”

“You’re not gonna learn it here,” Yamarone said. “You have to read the papers. Go to bloomberg.com. Keep up with current events. See if you disagree with things that are going on and be in tune with those things. You should care about where the economy is going.”