I know job search process can be frustrating. Especially so for the Engineering personality that tends to approach problems with logic, and finding a job defies all logic. Plus the economy has pushed competition for jobs in general to ridiculous levels. Even so, I haven’t seen a dramatic drop in Software Development. Which granted is a different part of the Computer biz than programming for hardware.
Hang tough, there is a job out there with your name on it. Ya never know, this could be the week you find it!
For what its worth, here’s my 2 cents of advice:
1. Keep looking until you find a good headhunter. Be honest with them (don't try to over sell your skill set), and check in with them often. Make your name come to mind when they receive that new job position. Also, listen to any feed back they give on your resume or from an interview.
2. NEVER underestimate the value of soft skills. If you’re new to the biz and don’t have tons of experience, its your strongest selling point. On more than one occasion it was my soft skills and ability to communicate that got me the interview and then the job. Seriously, required skills were sometimes learned once my butt had a chair.
3. Read job postings very carefully, and read between the lines if possible. Often they're written by HR that has no idea what the job is, not by the hiring manager. Separate "what they need" from "what they think they want", then compare that to your resume. Personally, I configure a different resume for each job application. If a skill isn't on the needs/wants list, it's barely mentioned on my resume. It means I apply for less positions, but it looks like I'm a better fit with those I do apply for. I never allow my headhunter to send a one-size-fits-all copy.