NEW YORK (CNN/Money) - While Friday's report on U.S. unemployment in May showed a surprising drop in the jobless rate it probably doesn't answer the big question on the minds of millions of unemployed workers -- namely, is the United States in for another "jobless" recovery?

The government reported that unemployment declined to 5.8 percent in May from 6 percent in April, defying forecasts of a rise to 6.1 percent by Briefing.com. A separate Labor Department survey of businesses showed that payrolls grew by a lower than expected 41,000 last month after rising by just 6,000 in April.

If rising unemployment together with an increase in jobs sounds like a mixed picture -- well, that's because it is. What's also mixed is the outlook for jobs going forward.

Economists seem to be of three minds -- one group thinks the economy will be just fine and significantly more jobs will be available by the end of the year, at the latest. Another group sees ominous signs that the labor market could be as weak as it was following the 1990-91 recession. And a third group says it's still too early to tell.

Many economists think the labor market's performance is right in line with normal patterns of recession and recovery. Unemployment is a so-called lagging indicator, meaning it generally rises even as the economy is recovering from recession. That's because employers won't start hiring again until they're sure demand justifies it.

"This is unfolding in a typical, cyclical rebound fashion, where businesses increase production without increasing aggregate hours worked or employment," said Mickey Levy, chief economist at Bank of America. "And the increase in production is a precursor to a pick-up in employment."

Though huge gains in productivity recently have come at the expense of the labor market, since businesses are getting more production out of fewer workers, they've also increased corporate profit margins, encouraging future investment and -- eventually -- future hiring.

In fact, Levy believes about 100,000 new jobs were added in May, above the consensus estimate, mainly because he thinks production is probably strong enough already to encourage hiring.

Not only have recent business surveys by corporate purchasing managers shown strong gains in manufacturing and service industries, Levy pointed out, but actual production has risen for four straight months, according to Federal Reserve data. Meanwhile, orders for durable manufactured goods jumped in April, and the drop in inventories has slowed after a rapid decline, meaning factory and store shelves are clean enough so that manufacturers can boost production again.

And the broader economy seems to be roaring back from one of the mildest recessions in U.S. history. Putnam Investments economist David Kelly, for example, noted that the 5.6 percent growth in first-quarter gross domestic product (GDP), the broadest measure of the economy, was much stronger than fully three quarters of growth after the last recession -- combined.

"This elevated growth rate in the economy should prevent a replay of the jobless recovery," Kelly said. "If we have two strong quarters of growth, then employment will start to show decent gains in the third quarter."

"The unemployment rate will come down slowly because of tremendous productivity gains, but I don't doubt the strength of final demand," Kelly added.

The only downside to this scenario is that the Federal Reserve could see a sustained drop in unemployment as a sign to start raising rates in a bid to keep the economy from growing too fast and stoking inflation. So far this year, the Fed has kept the target for a key short-term interest rate at a 40-year low, the economic equivalent of flooring the accelerator.

Before we start congratulating ourselves on the defeat of unemployment, consider its performance following the last recession. When that downturn ended in March 1991, unemployment was at 6.8 percent. It fell to 6.7 percent in April, rose to 6.9 percent in May and pretty much sat there until September of that year.

Then it started to climb, six months after the recession had ended. And it kept climbing, until it peaked at 7.8 percent in June of 1992 -- a full 15 months after the recession ended.

And if 75,000 new jobs sounds good -- economists' average forecast for last month -- then consider that about 125,000 people join the labor force every month, according to some estimates, so 75,000 might not even be enough to keep unemployment from rising.

"You need to create ever more jobs in order to absorb increases in the labor force as well as productivity gains," said Jared Bernstein, labor economist at the Economic Policy Institute.

During the 1990-92 recession and recovery, 22 straight months passed without the economy adding anywhere close to 125,000 jobs -- nearly half of President George Bush's administration, one that ended in large part because Bill Clinton hammered on the economy during his successful campaign.

While few economists are declaring that this recovery will be as grim for the labor market, many of them aren't yet ruling that possibility out, especially with the future of business spending -- cited by Fed Chairman Alan Greenspan as key to the strength of the recovery and new hiring -- in doubt.

"The corporate sector is highly leveraged, unprofitable and has excess capacity," said Lacy Hunt, chief economist at Hoisington Investment Management in Austin, Texas. "Those are not the ingredients to produce a great deal of growth."

According to Fed data, factories are operating at just 75.5 percent of capacity, the lowest level in 20 years. With so much equipment sitting idle, why would managers want to buy more manufacturing machines, much less hire more workers?

And while the pace of corporate layoff announcements slowed in May, according to data compiled by Chicago outplacement firm Challenger Gray & Christmas, June has gotten off on the wrong foot, with news of layoffs at IBM (IBM: Research, Estimates), "right-sizing" at WorldCom (WCOM: Research, Estimates) and more.

Meanwhile, consumer spending, which fuels two-thirds of the U.S. economy and helped make the latest recession one of the mildest in history, is showing signs of weakening under the pressure of rising unemployment, terror threats and other woes. For example, auto sales and a key measure of sales at major department stores both fell in May.

Though GM (GM: Research, Estimates) CEO Richard Wagoner said Tuesday that he expected sales to improve in 2002, GM nevertheless was forced to offer more rebates on sport/utility vehicles and pick-up trucks, pointing to a continuing absence of pricing power and raising the possibility that profits will stay weak.

"This recovery is generating very poor and clearly subpar employment and profit opportunities," Hoisington's Hunt said. "I don't know whether it's entirely jobless and profit-less, but developments on both those fronts are far below normal."

Indeed, many analysts say it's just too early to judge how the labor market will react during the current recovery from how it responded to the recession that started in March 1991.

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"I'm definitely ready to believe that the rate of job loss has slowed and that soon we will be adding jobs," Bernstein of the Economic Policy Institute said. "The question is, will we be adding enough to keep unemployment from rising?"

Bernstein thinks GDP needs to grow above 3 percent for at least two quarters in order to start bringing the unemployment rate down -- although getting it back to the pre-recession low of 3.9 percent in October 2000, when the labor market was tight and living standards were high -- could take a while.

For a gloomy example, consider the fact that unemployment was at 5.2 percent when the recession began in March 1990. It didn't fall to that level again until August of 1996.

"We've seen we can drive the economy at 4 percent unemployment with strong productivity gains," Bernstein said. "I won't be satisfied until we're back there. Many working families won't be either, I'd guess."

"When do we get down to 4 percent? That's anybody's guess," he added.