Jared Bernstein, a labor economist with the Economic Policy Institute, noted that job losses were a "lagging" phenomenon. That is, unemployment tends to peak well after the economic shocks that cause it, and takes longer to abate even after the economy recovers.
He noted that the lag had lengthened in recent business cycles, with it taking roughly two years after a recession was over for the economy to regain the lost jobs.
"Employers often wait to be sure that the economy is really tanking before laying people off in earnest. And they want to be quite sure that consumers are back before they take on other workers," Bernstein said. "Unfortunately, that lag has gotten a lot longer in recent years."
Deteriorating conditions for U.S. workers are likely to intensify calls for Congress to pass another stimulus package.
"When the private sector engine stalls, the public sector engine needs to kick in," Bernstein said.
A crucial factor in a recovery will be whether the financial shocks of the last few weeks and months have forced consumers to rethink their spending and saving habits.
For the first time in years Americans appear to be increasing their savings, said Ed Leamer, director of UCLA's Anderson Forecast. That is probably wise for consumers whose assets have lost value and for workers fearful of losing their jobs, but it robs the economy of its major driver: About 70% of the nation's gross domestic product is composed of consumer spending.
Leamer said that much of last spring's stimulus payments went toward savings or paying down debt, and consumers are even more inclined now to save extra cash, not spend it.
The trick in devising a new stimulus, he said, would be to help consumers spend a little more in the short run while learning to increase their savings over time.
"It's important not to panic the consumer," Leamer said. "The short-term problem is too little spending and the longer-term problem is too much spending. . . . A nice little gradual increase in saving is what we should be doing."
But, he said, the economy will not return to health until spending and saving are in better balance and Americans produce more and consume less.
"We're in an economy that's going to experience a structural adjustment," Leamer said. "We need to convert some of our malls into factories."
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maura.reynolds@latimes.com
