The NYTimes has a recent article about the current academic job market. In two words, it sucks. Professors who thought they could afford to retire are staying on, so positions aren't opening. Even when they do retire, hiring freezes are leaving their positions vacant until the economy improves, so post-doctoral researchers aren't likely to find a tenure-track position, and remain in underpaid temporary jobs. This means there are extremely few positions (as faculty or post-docs) for recent grad-students, and the usual routes out of academia, industry jobs, also aren't available. But while the routes out for grad-students are limited, recent college graduates who can't find real jobs are apply to graduate programs in record numbers.
While the situation is bleaker for the humanities, which have long been in decline economically, the scientific community in the US is keenly aware that however this turns out will have effects that will be felt for generations. The closest comparison I can make is the tremendous expansion of enrollment in colleges in the 1960s and '70s. As the students flooded in, colleges hired large numbers of professors right out of grad school. By the 1980s there were extremely few positions opening up, almost every professor had been hired in the previous two decades, and there were almost no retirements. A whole generation of academics had almost no chance of finding a professorship. I know several people of that era whose careers were permanently put onto alternate tracks because they simply couldn't find a professorship. Then, just in the last decade, that flood of professors hired to teach the baby-boomers have been retiring in droves, and many people were expecting a new wave of hires. More than one person has told me, "When I finished grad school, there were no jobs. When you finish, there will be openings everywhere." Now, given the economy into which I am graduating, I feel lucky to be in a sub-field that has some post-doctoral positions for a few years. Perhaps in three or four years universities will start filling all those vacant positions, and a new wave of young faculty, hopefully including me, will be an impediment to the career aspirations of our younger colleagues.