In November 2009, I wrote an article for Noozhawk titled “Is the Economic Recovery for Real?” At that time, all of the major U.S. stock markets had finished the third quarter of 2009 with the strongest showing for a quarter in the past 10 years. Underlying the optimism was the expectation that jobless claims would slow and that employment numbers would improve — and thus, so would the economy.

Consumer sentiment was showing some positive signs in 2010, and consumer spending improved in several months of the year. Incentives by car manufactures were robust enough to drive some better sales on these large-ticket purchases, too.

First-time homebuyers also were active, driven by lower housing prices, attractive mortgage rates and federal tax incentives. Corporate profits and productivity both looked pretty good in 2010, too. This was mainly because of 2009 layoffs that led to reduced personnel expenses.

Unfortunately, the jobs picture has remained mixed. Big companies are still hesitant to hire, and government hiring for the census created only temporary positions. Interestingly, small businesses in many different sectors would like to hire new workers, but can’t because of the lack of credit.

Simply put, the banks are still being very conservative and are reluctant to make loans or extend credit.

Without job creation, this recovery is on shaky ground.

In the latest labor report, nonfarm payrolls dropped 125,000 — the largest decline since October of last year. Unemployment actually fell to 9.5 percent from 9.7 percent, but that was primarily because of more people leaving the work force. Consumer sentiment has worsened in the past couple of months, and families are once again pulling back on spending (except on the Apple’s new iPhone 4).

The U.S. stock markets are beginning to recognize the consumer spending pullback, and see the continued jobless trend as signs of a weakening recovery. The fear of a double-dip recession is back. Let’s hope it can be avoided.

— Bill Masho is the broker/owner of Masho Associates. He can be reached at 805.895.4362.