Shortly after the 1990-91 recession, consumers went out and bought houses, cars and other expensive goods on credit, noted Richard Curtin, director of the University of Michigan consumer sentiment survey.
That helped boost job growth in construction, manufacturing and other industries.
But this time around, because of the severe credit crunch, people won't be able to get financing as easily, and those who can borrow will be reluctant to do so, Curtin's surveys indicate.
Instead of leading the way to a more vigorous economy, consumers are saying they want to save and keep their personal debts low. Americans socked away almost 7% of their after-tax income in May, the highest rate in 15 years.
"What this means is that we're going to have a slow-growing consumer sector," Curtin said. So even though the federal government's stimulus spending is likely to pick up some of the consumption slack next year, he said, "spending is expected to slow down in 2011 and disappear in 2012."
That's what scares Howard Roth, chief economist at California's Department of Finance. The Golden State has been hit particularly hard by the housing meltdown, and its jobless rate has already climbed to 11.5%.
"If you look at the situation of consumers -- home equity, it's gone away. The stock market has wiped away retirement savings," Roth said. "The consumers are not going to be able to spend as much as before."
Analysts say there are factors that could mitigate the jobless recovery.
Healthcare and government employers are expected to continue hiring. Green industries are emerging and will need more people.
What's more, companies today aren't seeing the kind of sharp gains in productivity that previously allowed them to expand output without adding workers, so this time, if a company wants to produce more, it may have to hire.
And with wages depressed because more people are unemployed, adding to the workforce will be cheaper. Many employers already have cut to the bone.
At Quality Float Works Inc., a Chicago-area manufacturer of industrial floats and valves, employment has shrunk to 15 from 20 a year ago. Some of the remaining employees are older workers who in ordinary times might have retired, said Sandra Westlund-Deenihan, the company's president.
"Their 401(k)s became 201(k)s. They stayed on with us," she said. When they are ready to leave, she added, it will create a wave of openings, but just when that will happen is anybody's guess.
