It looks like this will be the third jobless recovery in a row. Coming out of the last two recessions we had what has become to be known as a jobless recovery. Job growth usually surges coming out of a recession as companies rush to bring on new employees to rebuild inventories that were depleted in the downturn.

However, what has occurred since the early 1990's is that we have had to wait until the economy was able to build an asset bubble before significant job growth was able to be realized. The truth is that a substantial percentage of GDP growth and job creation has surrounded the financial services industry and real estate-bubbles that were wrought upon the consumer thanks to the Federal Reserve and financial institutions. This is the direct result of imbalances that have occurred from the false signals caused through inflation.

To further illustrate the condition of a jobless recovery, we were treated to last Friday's Non-Farm Payroll report. In it we found that August shed another 216 thousand jobs, as the unemployment rate jumped to 9.7%-the highest since June of '83. And last Thursday we learned that continuing claims spiked by 92k to reach 6.23mm. The stubbornly high continuing claims number shows how difficult it is to find gainful employment after being laid off. But perhaps the most disturbing number from either report on employment trends came from the NFP account. The report indicated that the goods producing sector shed another 136k jobs for the month. And the economy has lost an unbelievable 3.47 million goods producing jobs since the recession began in December 2007.

Even with all of the government's interference with the free market (cash for clunkers and an 8k tax credit to those who have not owned a home in the last three years), the country continued to lose employment.

So why aren't employers stepping up their hiring? As my friend Larry Kudlow puts it: "The threat of higher payroll taxes and energy costs is more than enough to deter new hiring. Taxes on upper-end investors are going to rise, too, and there may be health-care surtax on top of that. And don't forget that small businesses pay the top personal tax rate, which is going up. Oh, and how about the recent minimum-wage hike? Yet another business cost."

We have to allow the economy to retool itself into a more balanced condition where manufacturing levels increase. Or we will have to wait until another asset bubble is created before job growth, income growth and the consumer can start to be healed.

Unless the U.S. rediscovers its manufacturing base and rebuilds the goods producing sector of the economy we will not create the necessary amount of viable job growth. Unfortunately, the likely hood of rejuvenating our productive capacity remains low, precisely because we believe a lower dollar is the way to boost exports. The correct way to boost exports is to lower the corporate tax rate and reduce regulations. The way I see it is this: until the legislative ambiguity abates and/or the government has successfully inflated another asset bubble, we will suffer with the condition of a jobless recovery. And even if a significant level of unbalanced job growth is achieved, it will be of the non-viable and unsustainable variety once again.

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