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New York. If the US economy falls back into recession, it could be even worse than the last.

Given the tumult of the Great Recession, this may be hard to believe. But the economy is much weaker now than at the outset of the last one in December 2007, with most major measures of economic health — including jobs, incomes, output and industrial production — worse today than they were back then. And with growth so slow, almost no ground has been recouped.

In the four years since the recession began, the civilian working-age population has grown by about 3 percent. Today, the economy has 5 percent fewer jobs — or 6.8 million — than it had then. The unemployment rate was 5 percent, compared with 9.1 percent today.

Employers have already shed all the weak or extraneous employees that they could. As shown by strong productivity gains, companies are now squeezing as much work as they can from their “lean and mean” work forces. Should a recession return, it is not clear how many additional workers businesses could lay off and still function.

Of all the major economic indicators, industrial production — as tracked by the Federal Reserve — is by far the worst off. The Fed’s index of this activity is down nearly 8 percent below its level in December 2007.

According to newly revised data from the Commerce Department, the economy is smaller today than it was when the recession began, in spite of (or because of) feeble growth in the last couple of years.

Interest rates cannot be pushed down farther. The Fed has already flooded the financial markets with money by buying billions in mortgage securities and Treasury bonds.

“There are only so many times the Fed can pull this same rabbit out of its hat,” said Torsten Slok, the chief international economist at Deutsche Bank. 

NYT