Weak Jobs Report Highlights Grim Reality: We're in a Double-Dip
Who's up for a little (depressing) perspective on today's job numbers? One factor that often gets ignored in understanding why the employment situation is so dire -- this recession has done far more damage to the labor market than did previous economic slumps. Have a look:
As my colleague Carter Dougherty said, things are downright ugly; indeed, they may be even uglier than he thinks. Because while many observers talk about the dreaded "double-dip" recession in the future tense, key economic indicators suggest we're there now (Yes, I know that technically a recession requires two consecutive quarters of falling GDP growth, and no, I don't care.)
Perhaps most troublesome is the residential real estate sector. Home sales are plunging. Eminent housing economist Robert Shiller recently pointed to mounting concerns that prices, which had been recovering, could again start to decline. That would be devastating. Another housing dip would obviously tighten the valve on consumer spending, undercutting demand and growth. And you know what that means -- less hiring.
Other indicators that the economy is backsliding:
- Declining factory orders
- Falling construction spending
- Slumping consumer confidence
- Slowing manufacturing growth
- Sinking stock prices
We are just 2.3 points away from that critical -10 threshold on the ECRI WLI which at least historically, has guaranteed a recession. Just the free-fall itself is vertigo inducing, and the number's release at 10:30 Eastern is what pushed the market even further lower as bullish indicator after indicator collapse.Hopes for a V-shaped recovery are long gone. Even if the feds try to shock the economy back into life with another stimulus, historical trends suggest this downturn has a long way to run.
After the recession of 1990 it took nearly two years for jobs to reach their pre-bust peak. Following the dot-com crash in 2001, it took 39 months. Meanwhile, roughly 45 percent of the 14.6 million unemployed Americans have been hunting for a job for at least 27 weeks. That's the highest average length of unemployment on record.
Under the best case scenario, assuming that jobs rebound at roughly the same rate as during the early 1980s dip, employment will hit its pre-recession peak in September 2011, economists Josh Bivens and Heidi Shierholz project. But if the economy follows the pattern of the last two recessions, employment won't fully recover until 2013 at the earliest.
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