The recession is over and unemployment will begin to drop shortly from its perch near 10%. Larry Summers, the head of the National Economic Council,  and Treasury Secretary, Tim Geithner, say so frequently.

The American public, however, is not buying this “better times” argument. People are more concerned about losing their jobs than at any time since the the 1973 recession. One out of five US workers believe that they are “fairly” or “very likely” to lose their jobs in the next year. This number is extraordinary, both because of the despair that it represents and the assumption it supposes among Americans,  that unemployment will continue to increase into 2011.

Many Americans continue to be overwhelmed by their financial situations despite volumes of government statistics about higher savings rates and the deleveraging of the consumer as he pays down his debts. A new Gallup poll reports that “Forty-four percent of employees say they could go up to a month after losing their job before experiencing significant financial hardship, and another 27% say they could last up to four months.” This is one of the major reasons that Congress has decided to extend unemployment insurance to people who have been unemployed for up to 99 months, particularly if their state benefits have run out after the normal 26 months of payments. The cost of the bill passed earlier this month is $18 billion.

The rise of the pessimism is particularly evident when placed in a historical perspective.

The fear of job loss is at an even higher rate than in the 1982/1983 recession when unemployment was above 10% for five months, a number which was not reached during the downturn that just “ended”

Americans who are out of work or believe that they will be are trapped by the sea change in this economy. There are 5.5 workers for every open job. Employers are not hiring because they can get more productivity from their work force. The productivity number for the fourth quarter of 2009 was greater than 7%.  People with jobs want to keep them and are willing to work harder to do so.

The other hurdle that Americans looking for jobs must face is that the unemployed are simply not finding jobs. More than 4% of the entire US population has been out of work for over 26 weeks. This number is higher than at any time since the Depression. One of the things that businesses are doing to save on costs is to find part-time workers to take what were once full times jobs.

Most workers were able to find jobs that were comparable to the ones that they had after past recessions ended. As unemployment dropped from 9% to the 5% that most healthy economies can sustain, the jobs that opened up were similar to those that were available before the crisis. That is not likely to be the case for the period after the 2008/2009 collapse. Too many industries that provided good salaries and benefits, particularly manufacturing jobs like those found in the automotive industry have been destroyed and the restoration of this economy will not replace them.

This shift in perception about job security has caused an unusually low 42% of Americans to believe that they are “very” or “somewhat” likely to find a job just as good as the one that they have now.

The work force has become more disheartened even when compared to the worst recessions of the last four decades. People who are unemployed are out of work longer and more people believe that joblessness is in their future.  The level of pessimism  about  job security among Americans is unprecedented.

The other conclusion that results from examining the Gallup numbers is that people are not just pessimistic; they are afraid. They believe, as they should, that their lives will not get any better and may even get worse, financially. Those that do dot have enough money to cover living conditions after four weeks certainly have no money for retirement. It is not surprising that consumer spending remains low. People are not only concerned about money now; they believe that their financial lives will never be secure again.

The widely regarded economic theory is that a jobless recovery does not stay that way for long. Economic activity finally picks up and businesses begin to hire. The lag may last for two or three quarters, but then broad based hiring begins in earnest. No one seems to believe that is true as this recession ends.

Douglas A. McIntyre

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