Ouch! Jobs Report Is a Worrisome Sign

But the low unemployment rate still leaves room for hope that a recession can be avoided.

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Some ugly job numbers from the Labor Department. Tell us the bad news, Associated Press:

Employers slashed jobs by 63,000 in February, the most in five years, the starkest sign yet the country is heading dangerously toward recession or is in one already. The Labor Department's report, released Friday, also showed that the nation's unemployment rate dipped to 4.8 percent as hundreds of thousands of people—perhaps discouraged by their prospects—left the civilian labor force. The jobless rate was 4.9 percent in January.

So does this mean we are in a recession or one is just around the corner? Probably not, if you buy into the economic forecasting model created by Tim Kane, chief labor economist for the Republicans on the Joint Economic Committee. His research has found that the unemployment rate is about the best economic forecasting variable out there. And based on that, Kane's model says there is roughly a 15 percent chance of a recession.

One could draw the conclusion that the damage from the housing implosion/credit crunch is still fairly well sequestered from the rest of the economy. A counterpoint: The online betting markets put the odds of recession at 66 percent and rising again after dipping a week or so ago. And of course, the ultimate betting markets—the U.S. stock and bond markets—aren't exactly giving the economy a vote of confidence.