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The labor market continues bleeding, as today's update on the nation's payrolls for July reminds.

Compared with past recessions -- and, yes, we're in one -- the current ills look mild, as our chart below suggests. What worries us is that the pain, however modest, may roll on for longer than usual.

Is a "mild" recession that lasts longer than usual better, or less painful, than a deeper contraction that ends quickly? Only time will tell, although our suspicion is that in the grand scheme of economics, deeper and quicker is probably the better choice, although that depends heavily on how deep deep is.

In any case, no one has a choice and we're all fated to play the recession cards we're dealt. What's more, there's plenty of pain in the employment numbers these days, comparisons to the past notwithstanding. For the eighth month running, nonfarm payrolls contracted. Adding to the pain is the rise in the unemployment rate last month to 6.1%, the highest since 2003.

True, August's loss of 84,000 jobs in the economy was fairly middling, although that's cold comfort for those who are out of work. But in the search for a silver lining in today's employment news on a macro level, that's as good as it gets for the moment.

The question, then, is how long does the job destruction roll on? To repeat our standard mantra, no one knows. But there are clues, and currently they're not encouraging. As we pointed out yesterday, initial claims for new unemployment benefits look inclined to rise. The implication: Future employment reports will stay negative for the foreseeable future.

One result is that the Fed is likely to shy away from an interest rate hike any time soon. But even that traditionally bullish news has lost its power to inspire. Meanwhile, there's still the question of whether inflation is set to fade. If not, we're in for even greater challenges.

In short, there are still many risks bubbling in the economic and financial spheres. Defense is still the only game in town.

Source: Labor Pains: Deeper Contractions