Many Americans have felt the pain of recession -- and have pay cuts or fruitless job searches to prove it. Evidence of the recovery, unfortunately, likely won’t be as tangible.
Wall Street is already celebrating the coming recovery and the return of high pay and big bonuses, but on Main Street the economic recovery could be all but invisible.
That's because the recovery that's on the horizon, perhaps arriving by September, could have little to offer most Americans. On Tuesday, Federal Reserve Chairman Ben Bernanke said that "we have a very long haul here" and that "it's not going to feel like a strong economy." Not much to cheer about.
The U.S. gross domestic product, the value of all the goods and services produced in the country, is expected to grow 1% before the end of the year. But that's not enough to change some of the most daunting problems of this recession: high unemployment, stagnant wages and depressed asset prices.
"The bottom line for the typical consumer is: Just because Wall Street is having a party doesn't mean you are going to get your job back," said Christian E. Weller, a senior fellow and economist with the Center for American Progress, a nonpartisan policy research institution.
In fact, unemployment is likely to remain high long after the recession ends. The economy will need to show sustained annual growth of 2.5%, or more, for businesses to truly feel comfortable adding employees. That could take months or years, depending on the success of the federal government's efforts to stimulate the economy.
"This is what happens in a situation where the business sector gets shocked to the level that we have seen," said Brian Bethune, the chief U.S. financial economist at IHS Global Insight, a market intelligence and research firm. "They are going to use every other thing they can to raise output first and start hiring last."
That doesn't mean the recovery will be a jobless one. Before businesses start hiring, many will offer more shifts to existing employees. In addition, new businesses, such as those in the green technology sector, will start hiring just to get off the ground. But many businesses will remain reluctant to add workers.
In fact, if the recession is at all like the previous one, in 2001, unemployment will continue to rise long after the recovery's official start. Some economists are predicting that the jobless rate will climb to 10% from its current 9.5% before receding. President Barack Obama said in mid-July that unemployment will continue to rise for months.
Businesses are still eliminating positions. In June, the economy shed 467,000 jobs. The majority of layoffs -- about 52.4% of the more than 6.5 million jobs lost since the recession's start in December 2007 -- have occurred this year.
As long as U.S. unemployment remains high, asset prices will likely remain depressed. After all, if folks don't have the money to buy homes, they can't take the excess inventory off the market. That means home values -- the biggest driver of American wealth until 2008 -- will stagnate and even continue to fall in some areas.
"We are nearing the bottom in the labor market, but this is going to be a long, tough slog ahead," Weller said.