I’m glad we are out of the recession — and so are my family members, including the one who just got laid off two weeks ago; his wife, whose hours just got cut back; one who lost her job in April, the same week her husband lost his job, and both of whom are still unemployed; and another who is very glad because business is down only 10%.

Today we got a statistical pop in GDP, which came in at a better-than-expected 3.5%, and we may see another one three months now.

By then, official unemployment will be north of 10%, barring the seasonal adjustments for retail hiring, which the Bureau of Labor Statistics (BLS) is having fun with right now. And the real unemployment rate (unemployed, discouraged and part-time workers) will be north of 20%.

Also by that time, Goldman Sachs (GS) and the other Wall Street banks will have dispensed $140 billion in bonuses. Make no mistake about it, I am not a populist — I am a serious free market capitalist — but the insensitivity and moral laxness of the Street is appalling.

Enter the Bureau of Labor Statistics’ Fantasy World

But, back to my main point: While the BLS may not see unemployment rates rising significantly (it seems the folks over there are now taking instruction from statisticians in China), unemployment is climbing in the real world.

The BLS uses something called the birth/death adjustment that most investors gloss over, thinking it has to do with population trends. It does not. It has to do with the birth and death of companies.

And this “adjustment” still has the country birthing companies and jobs. Ha! And apparently it has been throughout the entire recession. Double ha!

In the real world, companies are dying, and jobs with them.

What Does a Jobless Recovery Look Like?

So what kind of recovery can we expect to see in 2010 with real-world unemployment rising?

Not a vigorous one. In fact, I doubt we’ll see one at all in the real world — although GDP in 2010 may be up 1%-2%.

And that is going to disappoint people big time — especially members of Congress who will probably spend your money in another stimulus package in hopes of getting re-elected.

It also means that estimates for an 85% rise in corporate earnings may be a bit too high. (I’m guessing you’re catching my sarcasm here.)

I am not a perma-bear — a good attitude to sell newsletters (and bomb shelters, freeze-dried food, automatic weapons and radiation-proof suits) but a terrible way to live. I am an agnostic and, simply put, unemployment, and the loss of $12 trillion to $14 trillion of household wealth and trillions of dollars in credit lines that won’t be replaced, means no real economic recovery in 2010.

How to Profit in the Real World

Does this mean you should be shorting the market?

Not so fast.

As long as the recovery is somewhere between anemic and non-existent in the real world — the Fed does not set policy using BLS numbers — the Fed is going to keep things liquid.

And, as long as Bernanke & Co. prints money to keep liquidity in the market, the stock market is going to hang around at elevated levels well beyond normal valuations.

Should Uncle Ben pull back on liquidity — jacking interest rates, shrinking the Fed’s balance sheet and so on — before there is hard evidence of a recovery, then plan your retirement around a short position in the market.

Until then, the market should trade back and forth, so it’s time to focus on something that’s starting to creep back into the market: company and industry fundamentals.

Going forward, good, old-fashioned stock picking, i.e., going long the winners and shorting the losers, is going to make you the most money.  

Let Michael Shulman help you make money on the short side of the stock market. Download a free copy of his new investing guide, Double Your Money — and Double it Again.