n order for consumer spending to come roaring back, however, one critical thing has to happen:
Consumers have to be employed
If consumers don't have jobs, they don't have much disposable income. They also can't borrow as easily (because, at least temporarily, banks have decided not to be stupid). And if consumers aren't employed, companies that sell to them can't grow as quickly, which affects the other 30% of the economy.
And how is consumer employment going? Badly.
The unemployment rate is now nearing the post-war peak of just over 10%. Yes, the unemployment rate is a lagging indicator--in part because it doesn't count unemployed people who have given up looking for a job. (As a recovery begins, these folks start looking for jobs, so the ranks of "unemployed" as defined by the BLS suddenly swells). But the rate is high enough that, unless it drops sharply, it's hard to see where the disposable income necessary to drive strong consumer spending growth (and borrowing capacity) is going to come from.
In the recession of the early 1980s, the unemployment rate dropped quickly in the beginning of the recovery. In the two more recent recessions, however, it did not.
The bulls say we'll have a sharp recovery this time because the rate of jobs recovery matches the rate of decline: Panicked employers cut too many jobs and now they'll have to hire them back. Anything is possible, but this bullish argument does not explain how the job market will rapidly absorb the huge amount of slack that is not reflected in the unemployment rate. It also does not explain how companies will rapidly increase their payrolls when they're selling to consumers that are hunkering down and trying to rebuild savings.
A record-low work-week suggests