The recession officially ended three years ago, but the 'recovery' has been a frustrating mix of good and bad news.
The economy isn't careening into a ditch. It's just stuck firmly in the slow lane.
A disappointing report on the job market Friday dashed hopes that a halting recovery would finally take off and generate hundreds of thousands more jobs every month.
Though the economy is growing, it still doesn't feel that way for millions of Americans who are unemployed or whose wages are barely rising. That could hurt President Obama's re-election chances.
The economy is in some ways measurably better than it was three years ago — manufacturing is stronger, vehicle sales are higher and a nearly moribund housing market is showing a stronger pulse. Yet almost every push on the accelerator has been countered by a sudden brake, keeping the recovery stuck at a frustrating half-speed pace. While gasoline prices are falling, for example, leaving consumers more cash to spend, the European recession has deepened and growth in China is slowing, hobbling exports and sapping business confidence.
"2012 is beginning to look horribly like 2011 — initial high hopes that the recovery was kicking into high gear, subsequently dashed," Nigel Gault, chief U.S. economist of IHS Global Insight, said in a research note to clients.
EMPLOYMENT: A slow climb out of a very deep hole
Job growth has been improving, but not enough to quickly lower unemployment. Since early 2010, the U.S. has added 3.7 million jobs. Payrolls have made average monthly gains of 85,000 in 2010, 153,000 in 2011 and 164,000 so far this year.
Yet the nation still has 5 million fewer jobs than it did when the recession began in December 2007. About half the states will recover all their lost jobs by next year, economist Jim Diffley of IHS Global Insight estimates. But that's more than twice as long as it took in the last four recoveries. All 8.7 million jobs lost in the downturn won't be recouped until 2016, IHS projects.
Most disconcerting: Job growth revved up at the beginning of 2010, 2011 and this year before slowing markedly each spring. From December through February, employers added an average 252,000 jobs a month. but job gains have progressively slowed the past three months. In May, employers added just 69,000, the fewest in a year, the Labor Department said Friday.
Economists initially blamed the slowdown on warm winter weather that pulled forward construction and other activity to early this year, damping spring sales and hiring. Mark Zandi, chief economist of Moody's Analytics, says some weather-related payback was still at work in May, contributing to a loss of 37,000 jobs in construction and hospitality.
But many economists say the darker jobs picture can no longer be chalked up to weather. Zandi points to worries by U.S. corporations about Europe's worsening financial crisis and says businesses' uncertainty has held back hiring. IHS' Gault says the stronger gains early in the year "were clearly out of line with the (weak) underlying pace of (economic) growth."
Federal Reserve Chairman Ben Bernanke has suggested job gains surged temporarily as employers made up for excessive layoffs early in the recession but the pace wouldn't last without stronger demand for their goods and services.
Last week, the government revised its estimate of first-quarter economic growth to a sluggish 1.9% annual rate from 2.2%.