New data indicate recovery not near

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By Patrice Hill

The end of the longest recession in recent history got pushed further off last month as employers eliminated nearly a half-million more jobs, unemployment rose to its highest level in 26 years and wage growth came to a standstill.

Thursday's news from the Labor Department triggered a dive in the financial markets and cast a cloud over President Obama's legislative agenda amid sinking approval ratings for his handling of the economy. For ordinary workers, the report renewed worries about record rates of job losses, shrinking wages and home seizures, despite what now appears to have been overblown hopes this spring for an impending economic recovery.

Big rallies in the financial markets had lifted spirits from March to early June, but many investors and consumers have grown disillusioned and unimpressed by the tiny statistical improvements in the economy that fueled predictions of a recovery.

"It's too early to celebrate," said David Wyss, chief economist at Standard & Poor's Corp., adding he now expects a recovery will not start until the fall.

"The recession has proven to be much longer and deeper than expected," he said. Not only are consumers still losing jobs and income at prodigious rates, but also their net worth has dropped 21 percent since the end of 2007 because of big drops in the value of their largest assets -- homes and stock portfolios.

That leaves consumers in no shape to become the engine of growth that will pull the U.S. and world economies out of recession, as many economists have forecast. "The recovery will be delayed," Mr. Wyss said.

Thursday's report that job losses grew to 467,000 in June from 322,000 in May clinched the case for many who believe Wall Street markets and forecasters had gotten overly exuberant about the prospects for recovery.

After climbing more than 40 percent from its lows in March, the Dow Jones Industrial Average has been retracing its steps. The Dow fell another 223 points on the job news Thursday.

President Obama called the bleak job news "sobering," but said he continues to be hopeful that the pace of job losses is falling off and the "recession is slowing." The long and painful recession has caused a drop in voter approval of Mr. Obama's handling of the economy from 59 percent in February when his economic stimulus bill was passed to 55 percent today, according to the latest Gallup poll.

"As I've said from the moment I walked into the door of this White House, it took years for us to get into this mess and will take us more than a few months to turn this around," Mr. Obama said.