Where are the %&@*!# jobs?

Repeat after us. There is no strong recovery without job growth. There is no strong recovery without job growth. Why does Wall Street not get that?

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By Paul R. La Monica, CNNMoney.com editor at large

At what level will the Dow Jones industrial average end 2009?
  • Above 11,000
  • Between 10,000 and 11,000
  • At 10,000
  • Below 10,000

NEW YORK (CNNMoney.com) -- Is anybody out there hiring? Seriously. I'm not looking for a job but I'd like to know if any major corporations are actually looking to boost their headcount anytime soon. Do I hear crickets?

Investors are continuing to celebrate healthy third-quarter earnings reports in what's turning out to be a far less scary October than usual for stocks. But a lot of the better-than-expected profits are coming thanks to job cuts.

And there still doesn't appear to be much evidence of an improvement in the labor markets coming anytime soon.

Sun Microsystems (JAVA, Fortune 500) announced Tuesday evening that it was planning to cut 3,000 jobs -- about 10% of its total workforce -- while it waits for regulators to approve its sale to software giant Oracle (ORCL, Fortune 500).

The New York Times (NYT) said Monday it was going to get rid of 100 jobs in its newsroom. That works out to an 8% reduction in the editorial staff at the Gray Lady.

Earlier this month, struggling PC maker Dell (DELL, Fortune 500) said it was closing a plant in North Carolina, resulting in the loss of more than 900 jobs. And medical equipment manufacturer St. Jude Medical (STJ) said a few weeks ago that it was cutting more jobs than it had originally planned back in the second quarter.

These are just a few examples of the continued bloodletting in Corporate America.

I hate to beat a dead horse here. Heck, I think this horse has already made a trip to the glue factory. But how can Wall Street remain in such a celebratory mood this earnings season when all signs point to more job losses and rising unemployment as far as the eye can see?

Yes, there are several things to be encouraged about these days. Banks appear to have taken a step back from the brink. The housing market looks as if it is stabilizing.

And even though rising energy costs could be a bit painful to consumers, the recent surge in the price of oil (not to mention other commodities) also seems to be a confirmation of what investors in stocks are saying: the global recession may really be over.

Finally, I'd be remiss if I didn't point out that many of the companies still announcing big job cuts are, to put it mildly, troubled firms.

For example, Sun Microsystems has continued to lose money and would be in more serious financial dire straits if not for the lifeline Oracle has thrown it. It's no secret that the newspaper business is mired in a horrific slump.

So it may be the case that future job cuts are only going to be coming from weak companies and that healthier firms could actually start hiring again as their profits improve.

"If we don't have job growth, we can't have a strong, or even sustained economic recovery," said Stuart Hoffman, chief economist with PNC Financial Services. "But it's not unusual for profits to head up before employment does, particularly when you have strong productivity growth."

That's all well and good. But as long as people are still losing their jobs, worried about losing their jobs or having difficulty finding a new job, it's hard to fathom how the recovery can be anything more than tepid.

"At this point, we're still losing jobs. For those who say the economy has already turned, I'm dubious about that," said Dan Seiver, a finance professor at San Diego State University. "We're in the process of bottoming but we can't call it a recovery until we're creating net new jobs."

Consumers are not going to spend as much if unemployment continues to rise. The jobless rate was 9.8% nationwide in September.

And according to figures released by the Labor Department Wednesday, 15 states had an unemployment rate above 10% last month. What's more, the unemployment rate was higher in 23 states in September than in August.

The moribund state of the job market is one reason why Allen Sinai, chief global economist and strategist with Decision Economics, wrote in a report earlier this month that we may be on the verge of "the mother of all jobless recoveries."

"Never before has business shed so many workers so fast, so many people failed to find work who are looking for work, and so many dropped out of the labor force as in the current circumstance," Sinai wrote. "The number of job seekers is way, way up and the number of job openings is way, way down."

This all sounds incredibly depressing. But here's some good news.

Seiver said that because people who are not actively looking for jobs are not counted by the government as technically being unemployed, it's possible for the jobless rate to keep climbing even though the job market may really be improving.

"As the economy starts to turn, more people may start looking for jobs and for every job that gets filled, there may be more people looking for work again. That's part of the problem with the unemployment number," he said.

Hoffman added that he thinks the nascent rebound in profits will eventually allow businesses to become confident enough to start hiring again. He said that there should be modest job growth beginning in the first quarter of next year and that the pace should pick up heading into 2011.

Of course, that's a long way off for people looking for work now. And Hoffman said that people shouldn't expect too much of a rebound in the job market at first.

"Job growth won't be rapid. Employment gains won't be up as fast as the losses were on the way down," he said.

That's why Hoffman thinks it is best for consumers and investors to temper their expectations and prepare for a gradual climb out of the recession, not an explosive rebound. He's referring to 2010 and 2011 as a "half-speed recovery."

Talkback: Are you worried about losing your job or finding a new one if you are currently unemployed? Is Wall Street underestimating how serious the problems in the labor market are? Share your comments below. To top of page

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