The November jobs report has shed doubt on the fragile economic recovery. A far poorer than expected November jobs report helped curb what had been rapidly rising bullish sentiment on Wall Street. While stocks edged up for the day, some investors credited the gains to expectations that the Fed will take further steps to boost the economy.

Still, investors should put the admittedly sour jobs report in more perspective even though there is no shortage of commentators jumping to conclusions. Some have gone as far as to declare the report as a watershed moment on the jobs front and a terrible blow to the Obama administration, for example.

But a look at the market backdrop in comparison with prior recessions shows that the data hardly torpedo the mounting evidence that the economic recovery is gaining momentum.

For starters, investors should note that the November jobs data came in a month that saw major swoons in the stock market. The S&P 500 index started a 4% slide on Nov. 5 that wouldn't reverse until almost two weeks later.

The Stock Market's Huge Impact

Fed officials have previously said that the stock market has a major effect on confidence broadly. Chairman Ben Bernanke noted the impact that a rising stock market can have when laying out his case for the latest stimulus round, and just last week, former chairman Alan Greenspan again argued that rising stock markets are the key to an economic recovery.

The so-called "wealth effect," in which rising equity prices boost the net worth of households is the most frequently cited mechanism for explaining why a rallying market helps the economy. More disposable income can help generate overall demand, after all.

A steadily lifting stock market, though, could also serve as a cue to employers that business conditions are stabilizing. And that's likely to play a key roll in generating the type of confidence required to take on major new commitments, like full-time employees.

Indeed, blockbuster job gains in October, which blew by all estimates, followed a months-long market rally. And that was also true for the strong spell of job creation earlier in the spring, before market turbulence and a hiring hiatus set in.

Employer anxiety about a tumbling market may have dampened job creation again in November. As the European debt crisis that caused so much consternation over the summer resurfaced – indeed, Ireland is a bigger issue than Greece – it's reasonable to expect employers to be less inclined to hire.

A wait-and-see approach, after all, is an understandable reaction in the face of a brewing financial crisis that could spin out of control.

Recovery Still Surprisingly Strong

A more sober-minded assessment by investors would reveal a surprisingly strong recovery even when the latest disappointing job figures are taken into account. Analysts at Ned Davis Research tabulated employment across industries following the November data and compared the current recovery to two prior recessions.

"To put the trend in perspective, private payrolls are tracking slightly better than the 1991 expansion and much better than the 2001 expansion," Ned Davis research wrote in a note to clients last week. Employment in the financial sector is at 12-year lows, while mining jobs growth is growing at its fastest pace since 1982.

Investors are likely to be bombarded with declarations of a jobless recovery following November's results. But they should factor in the month's market turbulence as well. Even though the U.S. is digging itself out of a much deeper hole this time around, the progress has actually been relatively strong compared to the last two downturns.

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HAPPY JACK

JOBS HAS IMPROVE <(THEY MUST BE TALKING ABOUT CHINA) here in the usa ,there's no meat left on the bone..........

December 06 2010 at 8:54 AM Report abuse rate up rate down Reply
sgentilejr

Jobless Recovery?? What does that term really mean?? It means that the wealthier and Big Business are pulling in the bucks and recovering nicely___while the working stiffs are getting it up the a$$. Starting in Sept. 2008 Bush began bailing out the Wealthy when the banks and Wall Street was on the brink of collapse. Obama continued bailing out the wealthy at the top and pouring in more Stimulus money. The Federal Reserve now took over the Bailout process and it is all being done to prevent the wealthy at the top from losing their shirts. Republicans fight a fierce battle to prevent the Bush tax cuts for the wealthy from expiring___yet they completely turn their backs on the poor unfortunate souls who cannot find a job. That is a Jobless Recovery_____and fits right in with the Republican Motto of " Scew the Pooor, We want More". A JObless Recovery is when the Government says___let those at the bottom fail, they are meaningless___Instead we have to bailout those at the top who matter more. So now we are all going to pay for the Money Bush and Obama pushed up to the top by bailing out banks and Wall Street. We will all pay through Social Security, military and civil service pension freezes and through every higher state taxes now that federal assistance to all of the states is going to be reduced further in 2011. WE will pay for the Bailouts through higher college costs for our children. WE will pay for the bailouts through higher gasoline taxes. What it amounts to is the people at the bottom are paying for the bailouts at the top, because our government works for and protects the wealthy at they top. They are saying the Wealthy are TOO BIG TO FAIL____but we can sacrafice all of those who are closer to the bottom. As long as the Wealthy survive___that is all that matters.

December 06 2010 at 1:54 AM Report abuse rate up rate down Reply
punnster

You are incredibly naive if you think those Wall Street Gamblers reflect our nation's economy.

December 06 2010 at 1:50 AM Report abuse rate up rate down Reply
goody1bo

Inflation or deflation, the outcome is going to be the deduction of the real value of debt from the money supply. What was borrowed will be paid back one way or another. If Bernanke prints too much, savers will pay alot. If Bernanke prints too little, borrowers will pay alot. But at the end, when the dust settles, it does not matter who pays in a global economy. Deflation is more likely than inflation in the near term. This is because if Bernanke does not print, then it is outright deflation as debt deflates. If Bernanke prints too much, then creditors will not lend at low rates, thus reduction in credit supply will be deflationary for credit dependent markets such as housing. In any case, deflation means pool is shrinking. http://www.kondratieffwavecycle.com/credit-inflation/ Our real problem is not unemployment, or housing, or productive capacity. Our real problem is man made. Self induced. We have borrowed fro the banks for many decades. Banks use fractional reserve bankind and they legally counterfeit money. This new money inflates the prices and salaries. Now our entire money supply is created by the banks like this and it is N. But we promised to pay back N+I, I is the interest. I hope it is obvious to you that entire population cannot possibly be employed with salaries that makes it possible to earn N+I. Thus, bankruptcies, foreclosures are a guaranteed part of this debt based monetary system. But then the question is: If borrowers are guaranteed to fail, why does the bank get to keep the house? When the economy is strained by excessive debt burden like this, do not hope to find employers who can hire people. They are in trouble too. Their customers are in trouble too. Everybody is in debt and nobody wants to spend. It is a deflationary crash. U3 is not an accurate indicator of unemployment. There are many people who want a job but they do not qualify for benefits and they are not counted! Real unemployment is about 18-22% right now. Another way to look at unemployment picture is to count who is actually employed: http://www.kondratieffwavecycle.com/unemployment/

December 05 2010 at 9:17 PM Report abuse rate up rate down Reply
simpsongrsm

The elderly who depended on interest from their savings are getting next to nothing - perhaps 1% or so. And it will go lower thanks to bobblehead Bernanke and his Fed. Money printing has got to stop! Govt. spending has got to be drastically reduced! Cost of essestials like food and gas going up! Inflation will kick into high gear in near future - it can not be stopped. Been in market since 1964 - just a crap shoot now! Obama incredibly incompetent - surrounded by like-minded wealth re-distribution Socialists. Before you spend your money on gold, silver and commidities - don't forget quality acreage with some lumber and good water. Good land is still relatively reasonable! Good luck - we will all need it with this imbecile in the White House!

December 05 2010 at 5:58 PM Report abuse +2 rate up rate down Reply
Dennis

What ever happened to integrity, sacrafice, and hard work in this country? Seems like evereyone wants to be the next tycoon, just look at all those late night infomercials on TV. And people are buying it hook, line, and sinker. Folks, there are no shortcuts in life. Anything worthwhile takes work. The stock market is looking like one of those shortcuts as of recent (nearly 80% climb off the 2009 bottom), but don't get swept up in it like you do with those late night infomercials. Have ANY of them panned out for you? This market is being rigged with faulty dollars, but it can't go on like that forever. At some point, this market WILL crash again, leaving you holding the bag for Wall Street. They've (Wall Street) done it before, got away with it, and they're doing it again. They're actually getting better at it - practice makes perfect. The end result, however, will be the same - your 401k will get hit and hit HARD. Don't let it happen again, don't fall into that trap again. Learn form the past - nothing has changed.

December 05 2010 at 5:29 PM Report abuse +1 rate up rate down Reply
Dennis

I recently read that college graduates are once again flocking to Wall Street. These young criminals-in-the-making have learned that crime does indeed pay in America. Remember the Savings and Loan crisis of the late 1980's? Between 1990 and 1995 no less than 1,852 S&L officials were prosecuted, and 1,072 placed behind bars. Another 2,558 bankers were also jailed, often for offenses which were S&L-linked. Now fast forward to today. Wall Street has created one of the worst economic catastrophies this country has ever seen. The S&L crisis was a walk in the park compared to this. But who's going to jail today??? NOBODY. In fact, the very same creators of one of the worst crisis's in American history are being handsomly rewarded for their ingenious destructive work. With record Wall Street bonuses, record taxpayer sponsored bailouts, and no jail time, it's no wonder that a career in crime (Wall Street) looks so appealing. Crime does pay in America and our young are flocking to it.

December 05 2010 at 4:31 PM Report abuse rate up rate down Reply
Dennis

For all the talk about creating jobs I've yet to see anyone in congress present a real plan for long-term job growth. I guess that would be too much work, it's so much easier collecting pay-offs and bribes. NAFTA was one of the worst ideas in this country and now US workers are suffering for it while China prospers with OUR jobs. Politicians have sold us out for years and now quantitative easing (currently QE2) is just another one of those really bad ideas that does nothing to create real jobs. It's just another gateway for the elite to rob us of the few remaining crumbs in America. The breaking point is near folks, Civil war is coming, prepare yourselves.

December 05 2010 at 3:55 PM Report abuse +1 rate up rate down Reply
bfpowersjr

I can't help but once again recommending the movie "Being There", starring Peter Sellers (it can be streamed from NETFLIX). In the movie (a somewhat cerebral comedy) the question is posed: Are the ROOTS of our economy as strong as they were after recent recessions? I, myself, see problems ahead when the maturity date of some financial instruments (derivatives?) arrives. Lets say they were entered into beginning in 2001 and mature in 10 years (i.e., when the face value must be paid.) Will the face value be repaid fully in 2011, and afterwards?

December 05 2010 at 3:47 PM Report abuse rate up rate down Reply
Dennis

The market went up on Friday because QE2 is now pouring into stocks. This is the plan of the Fed - print money out of thin air, force it into stocks and commodities, pause, repeat (QE3, QE4, etc.). The dollar is toast, soaring commodity prices will force sky high prices on all essentials (food, gas, heat, etc.), and Bernanke will have created a new bubble and the next civil war in this country - working class vs elite. No jobs + unaffordable essentials + the elite raping America = civil war.

December 05 2010 at 3:08 PM Report abuse +2 rate up rate down Reply