Bad and Worse News on Job Front

Unemployment rose in most cities and counties in December, signaling that companies remain reluctant to hire even as the economy recovers, according to a new report from the U.S. Labor Department.

The unemployment rate rose in 306 of 372 metro areas, the Labor Department says. As bad as that is, matters may be worse.

Job losses during the recession may have been underestimated by close to a million jobs. The prevailing figure is that the recent recession cost more than seven million jobs. It appears the Labor Department might have to revise those numbers, making the actual total eight million.

The shockingly bad news is that over the last 10 years, according to ADP data, the United States actually has added no net new jobs.

In December 2000 there were 111.65 million U.S. employees working. In January 2010 there were 108.14 million Americans working.

In May 2008 there were 115.2 million U.S. workers. That means the country must add back 7.1 million jobs--or more likely 8.1 million--to get back to where it was before the recent recession began.

That raises a question many of us have not been asking. Up to this point, the issue has been "when will the recession end?" with the implicit assumption that a relatively normal job recovery pattern would follow.

The recovery appears to have started, though we will have to wait for some time to date the actual turning. point.

The new question is what happens to growth rates and job recovery as the recovery continues.

Some have argued that consumer behavior has permanently altered because of the severity of the recession, which would imply a slower rate of growth, even if other negatives were not in place.

But there is no way to test the thesis of new consumer behavior patterns in the near term, because it will take years before consumers really are free to choose new patterns of behavior. There is a difference between "permanent" changes in behavior and "temporary" changes. We seem at the moment stuck in a "temporary" mode: people simply are not free to change their behavior at the moment. So long-term conclusions cannot be drawn.

That has obvious implications for the marketing of most consumer products and services. The recession is over, but recessionary buying habits will persist for some time. We cannot know whether these changes are permanent or cyclical.