It was far below expectations (the experts predicted 150,000) and shocked the financial markets. More importantly, it was a pointed reminder that we were still living with a "job loss" recovery: 25 months after the official end of our last recession, the economy is still down 776,000 jobs.

It's an unprecedented failure, for an economic recovery. Normally the economy gains millions of new jobs in the years following a recession. It now seems very likely that George W. Bush will become the first president since Herbert Hoover more than 70 years ago to rack up a net loss of jobs during his presidency.

There was plenty of other bad news in the employment report, some of which Mr. Bush mistakenly interpreted as good news. He called the decline in the unemployment rate from 5.9 to 5.7 percent "a positive sign that the economy is getting better" -- apparently not realizing that the opposite was true. The drop in the unemployment rate was due to 309,000 people leaving (or not entering) the labor force.

In other words, you have to be actively looking for work in order to be counted as unemployed. If enough people give up looking for work, the number of unemployed drops and so does the unemployment rate. And that is what got us to 5.7 percent unemployment in December, according to the Labor Department's monthly household survey.

Not a good sign at all. And if we look at employment instead of unemployment, the picture is even bleaker. The percentage of people employed in December was a low 62.2, about 2.5 percentage points below its high of April 2000. This is a huge difference: it means there were 5.5 million fewer people working. Ben Bernanke, the Vice Chairman of the Federal Reserve called attention to this recently, as showing that the labor market is much weaker than it looks.

Economists were also surprised that the manufacturing sector lost 26,000 jobs in December, extending its losing streak to 41 consecutive months.

What does all this mean for the state of the economy? Mainly, it means the current economic recovery is weaker and more fragile than most of the experts thought it was before the latest employment report. The main sources of spending that have been sustaining the "job-loss" recovery are running out of steam. The biggest was a wave of mortgage refinancing that, prior to the past summer, had allowed consumers to borrow and spend hundreds of billions of dollars.

The Bush tax cut provided some stimulus -- although it was poorly targeted and would have given more of a boost to the economy if it had not been so skewed toward the rich. The increase in military spending was also significant.

But all of these sources of increased demand have run their course. Consumers are hard pressed to borrow and spend more: the percentage of credit card holders behind on their payments hit a record last month. Without a major turnaround in the job market, it's hard to imagine how even this feeble recovery can be sustained.

And there remains a big cloud on the horizon, even if the job market should start to recover: the housing bubble. Like the stock market bubble that caused the 2001 recession, this $3 trillion bubble in housing prices is fully capable of throwing the U.S. economy into reverse when it bursts.

All that said, I wouldn't want to discourage President Bush from taking over the moon, or invading Mars -- especially as an alternative to invading other countries. We won't have to kill anyone, get our soldiers killed, or make the rest of the world hate us. And it will cost a lot less than the war in Iraq. But it might take a while for the jobs to trickle down to Planet Earth.

Mark Weisbrot is Co-Director of the Center for Economic and Policy Research, a nonpartisan think-tank in the nation's capital (www.cepr.net). Readers may write him at CEPR, 1621 Connecticut Ave NW, Suite 500, Washington, DC 20009-1052 and e-mail him at Weisbrot@cepr.net

Other Recent Articles by Mark Weisbrot

* The Fed and the Bubble
* Signs of Economic Recovery Haven't Trickled Down
* Anti-Sweatshop Movement Provides Needed Counterweight in the Global Economy

* Top Gun Fires Blanks on the Economy 

* Washington Pursues Dangerous Policy in Venezuela
* Bush in Africa: Compassionate Protectionism?

* Tax Cut Continues "Class Warfare"