While Recession has been replaced with Recovery, inquiring minds are still considering The Recovery That Isn’t, a recent article published byEuro Pacific Capital’s Peter Schiff.

Those who do cling to the absurd belief that, absent exponential productivity gains, the economy can expand while workers are being laid off will undergo a massive test of their convictions now that it’s clear the employment picture is bleak. Today’s weaker-than-expected report on non-farm payrolls revealed that employers shed 263,000 jobs in September. The losses propelled the headline unemployment rate to a 26-year high of 9.8%. U6, the Bureau of Labor Statistics’ most complete measure of unemployment, has risen to a dismal 17%. This figure includes those people who want to work full time, but have simply given up looking, or who have accepted part-time work in the interim. As it is similar to the methodology used during the Great Depression, U6 offers better historical perspective on the severity of our current crisis.

Taken together with yesterday’s larger-than-expected pickup in unemployment claims (first time claims rose by 17,000 to 551,000), today’s report makes it certain that the job market is still contracting….

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Schiff’s Conclusion:

Robust economies utilize all spare capacity, or restructure it for better use. Having 17% of our able-bodied population sitting at home or working part-time at Cinnabon indicates that our present policies are weakening the economy — even if GDP is growing. There is no “jobless recovery,” only senseless cheerleading.

Facts are facts. While many so-called leading indicators of economic recovery may be pointing to an end in this recession, the simple truth is:

• We have unemployment continuing to increase to the highest levels in almost 30 years
• There is an inventory of 3 to 4 millions homes that are in foreclosure or delinquency that has not yet hit the real estate markets. Since delinquency cure rates are collapsing, chances are the homes in delinquency will eventually be foreclosed on. This should lead to additional drops in the (real) value of residential real estate nationally over the next couple of years.
• Commercial Real Estate is now beginning to collapse, with hotels/resorts and large retail centers leading the way. The reasons here are multifold including 1) that real estate bough between 2002 and 2006 was bought at bubble prices and relatively expenses to its real value now  2) frugality is the new normal and consumers aren’t frequenting business establishments like they once did, putting added pressure on CRE.
• Credit lending is frozen, despite what we hear from The Fed and Treasury about lending programs. Americans have lost their primary income stream (jobs) and are quickly losing their secondary income stream (credit). A complete and total collapse in consumer spending is imminent. The average person is under pressure just to pay for basic essentials like rent, food and gas. How are we to expect that they can afford a new car, a night out at a fancy restaurant or a weekend trip to Vegas?
• Foreclosures and defaults on consumer credit lending are rising. This will lead to additional billions in losses for the major and regional banks.

The private sector may be showing temporary signs of recovery, likely from the billions trillions in stimulus and bailout packages. Make no mistake, however, that we the peoples’ debt is now at a level where it will become increasingly more difficult to service. As other nations lose confidence in America’s ability to weather the crisis (and need to deal with their own problems), the US Dollar will continue to lose value, adding to the woes of the average consumer, as the money in their pockets will purchase fewer and fewer goods. This, combined with the problems above, will be the straw that finally breaks the camel’s back. The middle class in the United States as we know it today will be no longer.