Boom! Economy Generates 166,000 Jobs in October

The American growth machine continues to shake off housing woes.

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On Wall Street, they call it "upside risk." It means an economist's sour forecast may turn out to be too pessimistic. Right now, after the Labor Department reported that the economy turned out 166,000 new jobs in October vs. the 80,000 consensus forecast, there is plenty of upside risk for the bears. Here a few takes on what might happen next:

1) Action Economics: "Today's robust U.S. jobs report has raised the upside risks to our 2.0% Q4 GDP growth estimate, and the big nondurable inventory and shipments gains in the factory goods report for September have boosted our Q3 GDP estimate from 4.2% from the 3.9% advance figure, and also suggest risk to the upside for Q4."

2) First Trust Advisers: "Today's employment report reflects the re-acceleration of GDP growth that started this Spring.... Now, in reaction to the nearly 4% real GDP growth rates in Q2 and Q3, payroll growth is turning the corner and moving up too.... In the months ahead we expect job gains to remain solid as real GDP growth maintains its resilience."

3) JPMorgan: "The September factory orders report implied an upward revision to 3Q GDP of 0.2 %-point, by way of greater inventory building. Also taking into account yesterday's construction report, 3Q GDP is now tracking 4.2% annualized, up from the BEA's advance estimate of 3.9%."

4) Strategas: "Financial job losses could still be ahead of us, given that we are still in the middle of financial problems that are being reported in slow motion. Nonetheless, with the economy continuing to expand, we continue to expect the Fed to pause in December to gather additional data—the base case going forward is to take the last Fed statement at face value, and view the economic risks as balanced, though financial risks remain."