This past Friday, the U.S. Department of Labor reported an unemployment rate of 9.4% for May. But while this better-than-expected number raised the hopes slightly of some economists, a new paper from New America Foundation's Economic Growth Program suggests that unemployment is more severe than reported by the Bureau of Labor Statistics-and that the economy is in the early stages of a "jobless recovery." 

Not Out of the Woods: A Report on the Jobless Recovery Underway outlines why recovery from this recession will be a jobless recovery, in which high unemployment persists even as other economic indicators improve.  It takes on optimistic commentators who have seized on the recently emerged "green shoots" to declare the economy on the path to recovery.  

"Our economy is very broken," says Leo Hindery, Jr., chair of the Smart Globalization Initiative at the New America Foundation. "The U.S. economy lost 345,000 more jobs in May, and it's a sad commentary indeed when such a huge job loss is perceived by some pundits as a 'good sign' because we didn't lose even more jobs.  All in all, an almost unbelievable 6 million jobs have been lost since the start of the recession in December 2007, when instead we should have been creating over the last 18 months up to 2.7 million new jobs just to keep up with population growth."

The New America report points out that  unemployment is not only higher than the BLS reports due to the undercounting of Americans who want to work but can't find jobs, but it is also concentrated in those industries that the United States most needs to grow in order to successfully transition away from debt-financed consumption to production and wage-led growth.  The Report argues that a protracted jobless recovery would most likely perpetuate the housing and banking crises by causing more loan-holders to default.  It would also complicate the painful deleveraging process that is just beginning in the household sector by putting downward pressure on wages, thus delaying a recovery in consumer spending.

"The Economic Stimulus Plan is simply too underperforming against the only measure that really counts, which is job creation, and as such it does not sufficiently rebalance our economy," says Hindery.  "If the U.S. is to persevere through this Great Recession and the jobless recovery underway, more must be done." 

Read the entire New America report here.