The financial crisis will take its toll on graduates, an economic adviser to former President George W. Bush said Wednesday at a luncheon hosted by the W. P. Carey School of Business.

The Economic Club of Phoenix met to hear Edward Lazear, Bush’s chief economic adviser from 2006 through the end of the administration, give his take on the economic crisis, recovery and prospects for the future.

Academic research shows that the effects of the recession will stick with college students long after graduation, Lazear said.

“The generation is scarred by this permanently,” he said.

Graduates will feel the impact of the recession for a while, although it won’t be significant three to four years from now, Lazear said.

Rishi Mohnot, a student ambassador for the business school, said he thinks the facts shouldn’t be overemphasized.

“If you look around at [students], they are not that significantly impacted,” he said.

Lazear said that despite positive indications, the economy is not yet in a recovery.

The economy contracted in the first and second quarters of the year, he said, but at a decreasing rate, indicating growth in the near future.

From the first to the second quarter, the rate of contraction decreased 5 percent, he said.

His research found the federal stimulus package accounted for only 1 percent of the decrease, he said.

Lazear explained the problem in terms of the Richard Pryor movie “Brewster’s Millions.” In the movie, Pryor’s character was told that if he could spend $30 million in a month then he would win $300 million.

The movie chronicles his difficulties spending that amount of money, he said.

“The government has the same problem right now,” Lazear said.

Quickly injecting $787 billion into the economy is very difficult, he said, and many stimulus-funded projects spend money very slowly, he said.

The Department of Transportation, for example, can only logically spend about 25 percent of its stimulus money in the first year, he said.

The other 4 percent decrease in the contraction rate is because of increased investment, Lazear said.

Economics professor Dennis Hoffman said financial markets showed some signs of stability over the last six months, but it’s unlikely that the markets will show dramatic improvement quickly.

“The market was trading about at this level a year ago before people thought the world was coming to an end,” he said.

While the market may improve over the next few years, it will inevitably pull back, he said. The difference between now and a year ago is that investors will soon come in and support the market, Hoffman said.

The most important challenge right now is overcoming unemployment, he said.

The worst part of this recession is that it’s hitting employment very hard, Lazear said.

“There are six unemployed people for every [job] available right now,” Lazear said, adding that job seekers should get back into the job market but not set their expectations too high.

At the same time, this is the best time to improve skills, he said.

Finding time to improve skills when making $50,000 a year can be difficult, he said, so anyone looking for a job should invest time in learning skills now.

The best way to become less susceptible to a recession is to improve your skills, Lazear said.

“The only hope for the future is to get back into improving skills,” he said.

Reach the reporter at rvanvelz@asu.edu.