I'm expecting freezes on hiring at many universities. I asked a friend at a major law school a few weeks back what he thought the effect of the economy would be on law school hiring. ... First, fewer people are going to be retiring; second, schools will be reluctant to fill vacancies. A handful of elite schools will be insulated from the downturn, I suppose. For all the rest of us, get ready for some more belt-tightening.... Maybe the real crunch will be felt next year; that's hard to know.
I was on the teaching job market at the tail end of the belt-tightening caused by the 1991-92 recession. It was an awful time to be trying to break into academia. I saw the statistics many years later, and something like three times as many faculty candidates were hired annually in the late '90s as in the early '90s. The last few years have also been good for prospective professors; state budgets have been flush, and many private and public law schools have received private gifts allowing them to expand their faculty.
Given the budget situation in many states, and the reduced endowments (and probably reduced giving) at private universities, things are likely to get a lot worse before they get better. Thinking about whether to go on the job market next year, or to finish that economics Ph.D./take a two-year fellowship/take that dream job working at an NGO in Geneva? The latter options should be looking relatively more attractive.