Officially, the recession of 2008-2009 is over. Stock prices are rising, as is the overall level of industrial production. But, if the policymakers in the federal government and the Federal Reserve Bank think they’ve succeeded they are wrong: lingering unemployment will mean that economic growth will be tepid, and may not be lasting.

Last week the December U.S. Dept. of Labor jobs report revealed where some of the problems are: Small and midsized companies are showing particular weakness, continuing a pattern that has been in place for almost two full years. Only the fact that more than 660,000 out-of-work people gave up their efforts to find a job has kept the rate of unemployment from rising above 10% of the workforce.

Without work, people cannot spend as they wish or as manufacturers and retailers expect them to do. Thus, stock prices may rise, but revenues (especially for non-financial institutions) do not.  

This dependence on consumer spending was supposed to be reversed with last year’s $780-billion federal stimulus program. Foundries and other manufacturers were supposed to benefit from the federal capital that would finance “shovel ready” projects.

Now, the Associated Press reports that stimulus spending has had no discernible effect on unemployment.

“It’s too soon to judge,” proponents of the stimulus plan may say – with some justification. But, note that the unemployment rate has risen in the months since the stimulus was authorized, and that it now lingers around 10% Waiting a year or more for a strategy to take hold, even while other financial indicators suggest a recovery is progress, confirms there is a more complex relationship between private-sector economic activity and companies’ hiring plans than is anticipated by the federal stimulus strategy.

One of the most consistent arguments against the stimulus— and against the expanding government role in financial markets in general — has been that it inhibits private businesses from making its choices about their futures. Between the federal grip on banks (which makes it difficult for companies to borrow) and government plans to revise energy and health-care policies (which makes it difficult for them to forecast their operating costs), small and midsized companies are keeping their heads down, hoping that the storm will pass. (This column details their resistance better than me.)

But there’s something more, and the notion that government planners seem not to have anticipated it is telling. Even if their prospects improve and their inhibitions are calmed, small and midsized companies will be slow to start hiring new workers because they are precisely the sort of organizations that are committed to “doing more with less.”

A culture of “productivity” infiltrated U.S. business during the last decade and a half, and it has not been eliminated by the recession: rather, the devotion to saving costs while improving results may become more intense. For managers and operators seeking to enhance their business’ performance, improving revenues will only confirm for them that it’s possible to succeed with fewer workers than before. That federal strategists overlook this point tells more about their lack of understanding of private business than that they believed heavy stimulus spending would jump start business in the first place.