While it’s been a great day for the Dow Jones, up 200 in late session trading, there are a number of caveats out there. First the good news: there were 163,000 jobs added in the month of July. With economists predicting 95,000 jobs created, it was a healthy increase. Now the bad news. 1) The unemployment rate actually increased to 8.3%. 2) The number of people who stopped looking for jobs climbed to 150,000. 3) The underemployment rate rose to 15%. 4)Temporary job hiring is strong but not a good thing because the workforce needs full-time jobs with benefits. 5) Jobs lost at the beginning of the recession are not coming back and in all likelihood, never will. There is a new economy and if there aren’t enough workers to fill those portions, the economy will continue to lag. Examples include technology and healthcare. 6) Black unemployment still sits above 14% and hispanic unemployment, over 10%, which means the recovery is helping some, more than others. I would love to sit here and look at the reports and say things are great but the economy is still in a very precarious situation. It’s very clear and you don’t need to be an economist to see it. If I own a small business and my taxes increase and on top of that, Obamacare kicks in so I really get hammered, am I going to increase my labor force? The absolute and definitive answer is No. The Bush tax cuts must be extended for another year or else a bad situation will become a critical one. The private sector accounted for 30% of the job growth, 30%. Could anyone in their right mind belive rasing taxes will be an incentive to those businesses to hire even more people? One thing is certain, the markets hate uncertainty. Congress needs to extend all of the cuts for one more year so as to give the economy its best chance. If next year the economy shows a strong and sustained period of growth, with fewer or none of the negatives listed above, then of course we need to make other tough decisions. But we’re not there yet. Expect the market to give back much, if not all of this rally by Tuesday.