Companies made $14,447 in profit for each worker in the first quarter of the year, compared to an all-time high of $14,477 in the third quarter of 2006, according to Joseph LaVorgna, Chief U.S. Economist for the firm.
When companies can no longer cut, the hiring begins,” said LaVorgna, who notes that first quarter corporate profits were up 31 percent from a year ago. “I do believe investors are buying into the recovery. It’s just that Greece and Sovereign risk are the main concerns.”"
Except for rare ‘jobless’ recoveries, hiring typically picks up in the latter portion of an economic rebound, confirming an increase in stock prices, particularly those of consumer shares. The S&P 500 is up more than 60 percent from it’s March 2009 low, with retail shares among the biggest beneficiaries.
But Lavorgna’s bullish outlook is not being confirmed so far this week. Best Buy plunged today after saying sales of TVs and gaming products were weaker than expected. Hershey said Monday night it will cut 600 jobs.Save
"I do not think payrolls will expand because expectations are falling, said Brian Kelly, founder of Kanundrum Capital and a ‘Fast Money’ trader. Kelly’s point is that not only are the Europe contagion fears delaying hiring decisions from gun-shy CFOs, but will actually lead to a double-dip recession for the globe.
But Lavorgna believes that Europe’s troubles can be contained to the region and not affect growth in the U.S. and China.
These concerns "will go away and we will see higher equity prices by year-end, said Lavorgna, who’s forecast for the S&P 500 is 1300. A new stock market high and more jobs…now that’s a forecast Wall Street and Main Street can get behind, if it turns out to be true.
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John Melloy is the Executive Producer of Fast Money. Before joining CNBC, he was an editor for Bloomberg News, overseeing the U.S. Stock Market coverage team.