Hints of Light in Dark Days of the Jobless

From the Wall Street Journal | Mar 5, 2010

In the mid-17th century, Thomas Fuller, a British preacher, sought
to comfort sufferers with the reminder that "it is always darkest just
before the day dawneth."

Investors ought to heed those words Friday morning.

The Labor Department's monthly employment report is expected to show
a loss of 75,000 jobs in February, according to forecasters polled by
Dow Jones, with the unemployment rate rising to 9.8% from 9.7% in
January. The "snow effect" from last month's grim weather is a wild
card that could make the figure even worse.

Losses of 75,000 would bring the tally of jobs lost since the Great
Recession began in December 2007 to a staggering 8.5 million, with
roughly 15 million people now unemployed. It could easily take a decade
or longer to bring the unemployment rate back below 5%, where it was
just two years ago during the boom.

Yet several forces suggest a powerful turn toward job growth could soon be at hand.

For one, increased demand on top of steep cost-cutting in the recession has resulted in a swift rebound in corporate profits.

The level of profits economy-wide remains below its 2006 peak but
accelerated sharply last year. In the third quarter, the latest data
latest available, after-tax profits jumped 12.7% from the prior period,
according to the Commerce Department. Estimates suggest similar
strength through year end.

That worked out to $12,491 in profits per worker in the third
quarter, according to Deutsche Bank, up from a low of $9,927 in the
fourth quarter of 2008. "You tend to get these big increases right
before strong job growth," says Joseph LaVorgna, the firm's chief U.S.
economist.

The U.S. could add 200,000 jobs a month for the rest of this year,
he says, even excluding the hiring of workers to conduct the 2010
Census.

The recent surge in hiring of temporary workers, often a precursor
to full-time positions, also points to vigorous gains. Employment of
temps has jumped by 248,000 since October, a 15% gain that is one of
the strongest rebounds on record.

Robust job growth wouldn't mean the U.S. economy is entirely in the clear.

But it does lessen the odds of a double-dip.