I am always open to the possibility that we may not have a major recession late in 2005. Right now, however, the market is behaving eerily like it did in the "no worry", "new economy" late in 1999, including low VIX and VXN numbers (they stayed low, relative to the their average in that period) through the whole blow up. Note that while advisors have not yet reached the 60% plus level bullish, they are getting very close. It all fits with a possible big run here in the next two months which will bring these numbers to "unsustainable" territory, then all you'll need is a trigger to precipitate a sharp decline in February and March of next year. All, of course, just my current opinion, and subject to change as data come in, including employment data. As for the latter, in the "economic picture" high employment numbers serve to compensate for the extended state of the financial state of the consumer. If enough new employees are added to the payrolls, this alleviate the expected retrenchment of the rest of the consumer body.
The economy is in a bad disequilibrium, with the balance of payments exceeding now 6% of GDP for almost a year, consumer having done a lot of refinancing that fuelled (and still fuel) the current expansion, and the US still serving as the only locomotive to world's economy. Reestablishment of economic equilibrium is just a question of time.