In March, U.S. employers added only 120,000 jobs—the fewest number of new jobs in five months—and well below analyst estimates of 205,000 (source: U.S. Bureau of Labor Statistics).

Loyal readers are well aware of my negativity on the economy…my feeling that the “rosy” job numbers of the past few months would not be sustainable.

Of the 120,000 jobs growth in March, 31% were in the low-paying “food services and drinking places” category. This is one of the reasons why hourly weekly earnings fell in March from February’s level by just $0.60; nonetheless, income in the pockets of the average American, which is 70% of GDP, is not growing.

Let’s keep this in mind, dear reader: while jobs growth was supposedly very strong over the last few months, registering over 200,000 monthly, wages stubbornly refused to improve. The jobs growth is not putting pressure on wages, which confirms that people are taking any job they can, not necessarily good ones.

Even though the jobs growth was moderate at best in March, the unemployment rate actually fell from 8.3% in February to 8.2% in March; the lowest level since January of 2009.

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How is this possible? More people fell out of the labor force and were not counted by the Bureau of Labor Statistics—more discouraged workers. The “labor participation rate” measures all people in the working age population (from ages 16-64) who are actually employed. In January, the rate hit a 30-year low of 63.7%; that is, only 63.7% of the people who can work and want to work are actually working. In February, it improved somewhat to 63.9%, but in March, it fell again.

Let’s express this in other terms. The number of people that are no longer considered part of the labor force by the Bureau of Labor Statistics has reached a record in March of over 88.288 million people!

(The Bureau of Labor Statistics defines “persons not in the labor force” as those who haven’t searched for work in the last four weeks because they are discouraged—unable to find work—or feel they don’t have the skills required to enter the job market. There are also the very few in this number who didnt work because of child-care reasons, family responsibilities, or ill health, or because they are currently in training or are unable to find transportation.)

If more people are falling out of the labor force, it is because jobs are becoming harder to find, putting into question the current jobs growth. Certainly, this is a reflection of this recession—and supposed jobs growth recovery—that is five years running now!

One can see from the chart above how the rate with which people are falling out of the labor force has increased dramatically since 2007—a slowdown in jobs growth.

U6, as reported by the Bureau of Labor Statistics, is a broader measure of the unemployment rate, because it takes into account discouraged people as well as those working part-time who want full-time work. The U6 unemployment rate dropped to 14.5% in March, an improvement from February’s 14.9%.

Once again, the improvement in this unemployment rate doesnt come from jobs growth, but from those workers who are no longer counted, as detailed in the graph above.

Even though many are surprised by the weakness of this jobs growth, I’m not, dear reader, because it is a reflection of the other weaker economic data that Ive been highlighting in these pages so far in 2012.

With little jobs growth (while the unemployment rate improves?), no increase in wages and low-paying jobs still counting for too large a number of the jobs growth, one wonders where the “recovery” is in this supposed economic recovery. The answer is that there is no real recovery…just rising government debt, artificially low interest rates, and an unprecedented increase in the money supply—a fake recovery if you will. (Also see: The Land Debt Built .)

Five years into this supposed economic recovery from when the financial crisis first hit and this country is still far from recovering the over eight million jobs it has lost since then. The U.S. economy has also not returned to the GDP level it was at in 2007, just before the financial crisis hit.

From the 1980s to just before the 2007 financial crisis, recessions lasted one to three years before economic growth resumed. From 1947 to 2011, GDP growth averaged 3.28% per quarter, but we have yet to return to this level in this economic recovery, even though we are five years removed from when the financial crisis first hit.

The official unemployment rate is 8.3%, although I would argue that the underemployment rate is the more accurate measure of unemployment in this country. That aside, the official unemployment rate today in this economic recovery is 8.3%, when it was 4.4% before the financial crisis hit.

When the economy was growing, there were many months where 300,000 and 400,000 jobs were being created. It’s been five years since the financial crisis hit and we have yet to experience this type of monthly growth in jobs in this economic recovery.

Often, after a recession, a recovery in the housing market is usually a sign that the recession has passed and that an economic recovery is taking hold. Five years after the credit crisis, we are all still waiting for the bottom in the U.S. real estate market, even though there are economists every single year claiming that “this” year is the bottom.

Consumer credit is not expanding. With the average American still having over one dollar of debt for every dollar of income, this expansion of credit will be hard to come by. Those who have jobs in the U.S. are seeing their real disposable income fall—not keeping up with inflation. How can credit expand in such an environment? In turn, how can there be an economic recovery in such an environment?

Corporations are sitting on record amounts of cash and are not investing it in capital projects that will create jobs because of two reasons. I believe the reason for the lack of incentive to invest is that corporate America doesnt believe there is sufficient consumer demand due to the aforementioned consumer who is saddled with debt.

Five years into this supposed economic recovery, the financial crisis is fresh in everyone’s mind; the average American doesnt feel as though things are improving—except for the stock market, of course. Watch that stock market rally, dear reader; it does not look to be sustainable. (Also see: The Makings of a Classic Bear Market Trap .)

Where the Market Stands; Where it’s Headed:

The Dow Jones Industrial Average is basically stuck at the 13,000 level. While the bear market rally does its best to lure investors back into the stock market, real cracks in the economy are starting to show.

Dear reader, there has been no real growth in this post-recession economy. It’s all smoke and mirrors. What we have are a government falling more into debt each passing day, a central bank that keeps interest rates artificially low, real inflation rising, and no real job growth. We are experiencing the most anemic post-recession economy recovery since the Great Depression. I see worse times ahead, not better times. We are nearing the end of the bear market rally that started in March of 2009.

What He Said:

“In 2008, I believe investors will fare better invested in T-Bills as opposed to the stock market. I’m bearish on the general stock market for three main reasons: Borrowing money in 2008 will be more difficult for consumers. Consumer spending in the U.S.is drying up, which will push down corporate profits.” Michael Lombardi in PROFIT CONFIDENTIAL. January 10, 2008. The year 2008 ended up being one of the worst years for the stock market since the 1930s.