Is this bad news for the recovery? The Labor Department reported that the U.S. unemployment rate jumped to 10.2% in October, pushing the rate atop the 10% mark for the first time in 26 years. Nonfarm payrolls fell by 190,000 in October, bringing the total number of jobs sacrificed to the recession to 7.3 million. October was the 22nd straight month that saw payrolls decline. According to MarketWatch, expectations were for an unemployment rate of 10% and 150,000 jobs lost.

Yesterday, I took a look at the weekly jobless claims, suggesting that we could see a substantial drop today if this morning's jobs report came in worse than expected. The report was worse, now let's see if yesterday's "good news" and rally is going to give way to a slump like last Friday.

It would have been nice if the jobs report this morning was simple, containing only surprises to the upside. But of course, the jobs market continued to show weakness as the August nonfarm report showed. The unemployment rate rose from 9.4% in July to 9.7% last month, the highest since June 1983. Meanwhile, employers cut a net total of 216,000 nonfarm jobs.

The unemployment rate was above economists' expectations of 9.5%, but the payroll decline below their projections for a cut of 225,000 jobs. For now, stock futures are still higher, indicating markets could at least start the session on a positive note.

247,000 US jobs were lost in July, far less than the 320,000 that were expected. The unemployment rate eased slightly to 9.4% from 9.5% in June. And there was more good news -- 43,000 fewer jobs were lost in May and June than previously reported.

The Labor Department reported that this was the first time since April 2008 that the jobless rate has fallen. Official numbers show that 6.7 million jobs were lost since the start of the recession.

At 8:30 a.m. Eastern this morning (about two hours from now), the government will likely report another horrendous jobs report, with analysts expecting that 615,000 nonfarm jobs were lost in February and that unemployment reached a rate of 7.9%, according to Briefing.com.

Somehow, some people are saying a bad jobs report could spark a rally. How so? Granted, lately the markets move oftentimes in utter disconnect of the news, and who knows, it's quite possible we'll see a rally following Thursday's selloff. But if anyone would be buying stocks because the jobs report shows the economy keeps getting worst, that would be quite amazing -- even for these crazy times.

Today's markets are likely to move based on the higher-than-expected unemployment rate. At 8:30 a.m., the Labor Department announced a mixed employment picture: lower-than-expected job loss, yet higher-than-expected unemployment rate. But the more important questions for the economy are how many jobs were lost in 2008 and how many more will perish in the next few years.

Despite being better than expected, the numbers of jobs lost in December are still awful at 524,000. Not to mention, that the unemployment rate rose from 6.7% to 7.2%. Economists had forecast 550,000 lost jobs in December and an unemployment rate of 7%. The actual 7.2% unemployment rate is the highest in 26 years. Also, the 2.6 million jobs lost in 2008 marks the worst level since 1945. If things keep going along those lines, the unemployment rate could top 10%.

The U.S. economy lost another 159,000 jobs in September, as companies in the world's largest economy continued to cut expenses to protect profits in the face of the economic slowdown. It was the largest monthly job loss in five years.

However, U.S. Labor Department officials cautioned that the September job loss total was skewed artificially higher by Hurricanes Gustav and Ike, which resulted in more job losses in the Gulf States region. Further, the unemployment rate remained the same at 6.1% in September, the Labor Department said.

However, an alternate gauge of unemployment, which includes discouraged workers, rose to 11% in September from 10.7% in August. The conventional U.S. Labor Department unemployment rate does not include discouraged workers because they are not technically 'seeking work.' Still, some economists argue the discouraged metric is a more-accurate gauge of unemployment, contending that these discouraged workers would accept jobs if the positions were available.

Also, the number of adults working part-time because no full-time job was available increased by 337,000 to 6.1 million in September.

Economists surveyed by Bloomberg News had expected the U.S. economy to shed 100,000 jobs in September. September was the U.S. economy's tenth straight monthly job loss. The U.S. economy lost a revised 73,000 jobs in August and 67,000 in July. Further, the U.S. economy has now lost 760,000 jobs this year and more than 800,000 since the job slump started in late 2007.

The U.S. market is driving the world -- whose stock indices plunged after yesterday's 345 Dow rout. But what does today bring? A chance for recovery or further devastation depending on whether reported economic statistics are better or worse than economists expect. Early reports are bad.

Here are the reports to watch, and what analysts had been expecting according to CNNMoney:

• Job cuts - Economists expected 75,000 lost jobs, but the 8:30am report was 84,000 lost jobs -- worse than expected.
• Unemployment rate - They had forecast the jobless rate to stay the same at 5.7%, but economists were wrong on this one too and unemployment rose to 6.1%.
• Hours worked - Economists anticipated the hour work week wouldn't change from July at 33.7, and they were right.
• Change in hourly earnings - Economists saw a 0.3% increase in the hourly wage, the same as July, but hourly wages rose 0.4%. Some may interpret this as inflationary pressure, but the increase is likely not enough to increase consumer spending either.

In general, these statistics suggest consumers are less able to spend money. Since initial numbers suggest things are worse than had been anticipated, stocks could plunge, causing policymakers to meet this weekend to try to hatch another plan to boost investor confidence for announcement on Sunday night.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

The U.S. economy lost another 51,000 jobs in June, the U.S. Labor Department announced Thursday, a figure that suggests the world's largest economy continues to slow, but has not seen -- so far -- the massive job losses that have accompanied previous slowdowns/recessions.

Meanwhile, the unemployment rate rose to 5.7% in July -- the highest rate in four years.

Economists surveyed by Bloomberg News had expected the U.S. economy to shed 72,000 jobs and the unemployment to remain the same at 5.6% in July.

Further, June was the U.S. economy's sixth straight monthly job loss and brings total job losses in 2008 to 463,000, the Labor Department said.

Not good news, but not horrible, either

Economist Glen Langan took pains to underscore that the July jobs report was not good news, even as he, and perhaps other economists as well, were somewhat relieved that the July jobs report was not a debacle.

"It's by no means a strong report, as it continues to show a difficult job market, but it isn't a totally awful report either," Langan said.

Not good. Not good at all!

The U.S. has experienced a surprise drop in jobs in January for the first time since August 2003. Some economists have estimated that the U.S. had entered recession already in December of 2007. The recent GDP statistics of an abysmal 0.6% growth in the last quarter of 2007, as well as the weak 2% rate in consumer spending in the last quarter, certainly could back that up. Now, this 17,000 loss of jobs in January, which none of the 80 economists surveyed by Bloomberg had predicted (the median called for an addition of 70,000 jobs according to Briefing.com), further increases the odds the economy will fall into a recession. That is, if it hasn't already.

The Wall Street Journal [subscription required] reports that employment rebounded in September -- Nonfarm payrolls rose 110,000 in September and August was revised to an 89,000 rise from a previous estimate of a 4,000 decline. By the Street's twisted logic, this should be bad news for the stock market. How so? Good news on the job front means that the Fed does not need to cut interest rates more to rescue the economy.

Yet just the opposite is happening -- the market is celebrating. According to The Associated Press, Dow Jones industrial average futures for December surged 94, or 0.66%, to 14,133. Standard & Poor's 500 futures gained 11.70, or 0.75%, to 1,563.90. Nasdaq 100 index futures jumped 17.00, or 0.80%, to 2,140.00. The market may have been expecting worse figures and thus placed bets on declining stocks -- a bet it must now reverse by buying to cover short trades.

So is the market moving because of economic prospects or hopes for further rate cuts? The nice thing about Ben Bernanke's Buyout Bailout (BBBB) -- the Fed's 50 basis point interest rate cut on September 19th -- is that there was no specifically measurable reason given for the cut. Absent a compelling justification for the BBBB, an additional 50 basis point cut by year-end can be done regardless of the economic news.

It was bound to reach the labor market and it did. Employers in the U.S. added 88,000 jobs in April, the fewest jobs since November 2004. This compares to March, when payroll increased by 177,000 jobs. Economists had expected nonfarm payroll to rise by 100,000 in April.

The unemployment rate rose to 4.5% in April, from 4.4% in March, as economists had forecast. March jobless rate was the lowest in five years, but the slowing economic activity suggests unemployment rate is understated at the moment and will rise. Average hourly earnings rose 0.2% in April. In March, hourly wages gained 0.3% and economists had expected the same in April. Year-over-year, earnings are up 3.7%.

The sluggish homebuilding and manufacturing sectors finally affected payroll. By sector, retailers cut 26,000 jobs, manufacturers shed 19,000 jobs and builders 11,000.

The job market is cooling as economic growth slows. Only last week GDP report showed the economy expanded at an annual rate of 1.3% in the first quarter, the weakest pace since the first quarter of 2003. The Federal Reserve has been relying on consumer spending to offset the other weaker sectors of the economy and steer it to a soft landing. However, fewer jobs will translate into slower wage growth and as Americans are struggling with higher gasoline costs, consumer spending could get hurt.

The Fed is trying to balance inflation and growth. So far, in the past two years, it has increased rates and lately has left them unchanged in effort to curb inflation without choking the economy. It is possible that recent data, including the possible further tightening of the labor market, could cause the Fed to cut rates by the end of the year. Next week, however, it is widely expected the Fed will leave rates unchanged.

It seems that almost every morning this past week I started with the same mantra: Futures are positive in early morning trade, pointing to a higher start for stocks. The bulls were trying really hard it seemed to inject optimism into the market, but every day something happened. If it was economic indicators, oil prices or earnings, every day (even if the market ticked higher at the beginning), stock markets closed down for five sessions in a row.

Well, this morning is no different and the bulls will give it one last shot this week as futures are indeed positive in early morning trade, pointing to a higher start for stocks. The question is what the much anticipated October job report will be like when it is reported at 8:30 a.m., before the market opens.

Nonfarm payroll, one of the many indicators reported by the U.S. Department of Labor Employment Report, is expected to have added 125,000 jobs in October after a 51,000 increase in September. Hourly earnings is forecast to rise by 0.3% in October compared to an increase of 0.2% in September. A 0.3% rise would be a yearly rate of 3.8%.

Another significant data point would be the unemployment rate, which is expected to remain the same at 4.6% after ticking down to that number last month. The question is whether after a week of weak economic reports, could strong employment data help spur a rally and diffuse pessimism.

Adding to the negative sentiment are the comments made by a top Caterpillar, Inc. (NYSE:CAT) executive who said last night that he believes 2007 will be a year of "significant slowdown" in the U.S. housing market. However, he also predicted world-wide faster growth in the next few years (based on Fed rate cuts in 2007).

Top of the news this morning:

A surprising announcement of partnership comes from two old-time rivals, Microsoft Corp. (NASDAQ:MSFT) and Novell, Inc. (NASDAQ:NOVL). The two announced they would collaborate to build, market and support a series of new solutions to make Novell and Microsoft products work better together. That is, Linux, the operating system distributed by Novell, could work with Windows, Microsoft's operating system. Novell shares were up over 15% yesterday before the announcement.

The Federal Communications Commission has delayed its vote again on the proposed $80 billion merger between AT&T Inc. (NYSE:T) and BellSouth Corp (NYSE:BLS).

Qualcomm Inc. (NASDAQ:QCOM) reported fiscal fourth-quarter earnings. Profits rose 14% to $614 million, or 36 cents a share. Revenue jumped 28% to $2 billion. Excluding a 6 cents a share for adjustments, Qualcomm earned 42 cents a share. Analysts had projected a profit of 41 cents a share. The stock fell over 2% in pre-open trading on lower projections.

Electronic Arts, Inc. (NASDAQ:ERTS) shares are rising over 8% in pre-market trading after it reported earnings that beat estimates, boosted its fiscal year guidance and had a positive industry outlook for next year.

On the other hand, Whole Foods Market, Inc. (NASDAQ:WFMI) is losing more than 17% in pre-market trading despite a sharp increase in profit, after the company warned of slower sales growth in 2007.

In Seoul, the appeals court sentenced the founder and former chairman of Daewoo to eight and a half years in prison on a range of charges including embezzlement and accounting fraud. General Motors Corp. (NYSE:GM) acquired a major stake in the collapsed Daewoo Motor to create GM Daewoo in 2002.

Other news:

General Electric Co. (NYSE:GE) lost a contract to Rolls-Royce as Singapore Airlines, said it had chosen the Rolls-Royce Trent 700 engine for the 19 Airbus A330-300s which are due for delivery by 2011.

Fortune analyzes the future of mobile video sharing such as the one Google, Inc.'s (NASDAQ:GOOG) YouTube plans to offer.

Would the election outcome affect pharmaceuticals? Merrill Lynch predicts Big Pharma -- Pfizer, Inc. (NYSE:PFE), Merck & Co. Inc. (NYSE:MRK) and Bristol-Myers Squibb Co. (NYSE:BMY) -- and other healthcare companies would be harmed if the Democrats win. However, generic-drug makers, the likes of Barr Pharmaceuticals, Inc. (NYSE:BRL) and Mylan Laboratories, Inc. (NYSE:MYL) would benefit. Find out more on effects of the election outcome on drugs here.