How To Learn Stocks | How To In Invest In Stock | How To Pick Stock

Last week’s disappointing unemployment report made one thing perfectly clear: Any glimmers of hope that the economy is going to recover soon will have to remain mere glimmers for now. Even our most optimistic pundits don’t expect robust improvements in employment or the economy anytime soon.

Employers cut 467,000 jobs in June, a steep increase from 345,000 jobs in May, according to the Labor Department’s report on Thursday. That boosted the June unemployment rate to 9.5% from 9.4% the previous month. A small silver lining: Unemployment was expected to hit 9.6% for the month. But to market experts, that’s little consolation.

“The patient is improving, but remains on massive life support,” says Morgan Keegan economist Donald Ratajczak. “How anyone can say the recovery has begun when job losses per month remain higher than the highest monthly job losses in each of the two previous recessions is beyond me,” he wrote in a June 29 research report.

Economic Policy Institute economist Heidi Shierholz put it more starkly: “This is the only recession since the Great Depression to wipe out all jobs growth from the previous business cycle, a devastating benchmark for the workers of this country and a testament to both the enormity of the current crisis and to the extreme weakness of jobs growth from 2000-07,” she wrote in a report Thursday.

Normally bullish economist Ed Yardeni, founder of Yardeni Research, said that even though global consumption could well pick up, the U.S. is heading toward a jobless recovery. “It’s really hard to see any sector where the prospects for employment aren’t either grim or dim,” he wrote June 29. “I certainly can’t make a compelling argument for positive employment surprises in manufacturing, construction, retailing, and finance. Even government isn’t likely to be the employer of last resort given the sorry state of state and local finances.”

However, many pundits believe that the worst of the worst is past. Stuart Hoffman, chief economist at PNC, said the recent barrage of economic indicators and data “paint a picture of a gradually healing economy that is in the loosening grip of a major recession.” In his July 1 report, he pointed to a pickup in manufacturing last month, the sixth consecutive boost to the ISM Manufacturing Index.

Those positive gains in manufacturing bode well, but it may take a while for it to have a real impact on the economy, says Barry Knapp, head of U.S. equity portfolio strategy at Barclays Capital. “The sector likely to show the most momentum, manufacturing, is in a lull between the end of inventory liquidation and the production ramp-up,” he wrote in a June 29 note. “So, while we continue to believe the recession ended in May, we may have to wait until later in 3Q09 before the macro indicators begin providing positive surprises once again, thereby driving stock prices higher.”

Real quarterly profit growth remains a critical indicator. But the highly anticipated second quarter earnings reports, which kick off when Alcoa (AA) reports on Wednesday, won’t provide much clarity, says Doug Roberts, chief investment strategist at Channel Capital Research. The absence of fundamental growth and easy year-to-year comparisons to the woeful figures from last year will likely make the coming crop of earnings a less reliable way to diagnose a recovery, he says in his July Market Commentary.

“Understand that this is no ordinary bear market,” says Roberts. “I continue to recommend being prepared for the worst with the possibility of being pleasantly surprised. It is far better than the reverse scenario.”

SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 – 2009 SmartMoney. All Rights Reserved.

Source: http://feeds.smartmoney.com/smartmoney/investing

Click Here to Learn How To Generate Profitable Winning Trades
On Autopilot In Only An Hour A Day