A tightening in the credit markets threatens to strangle economic growth. Consumer spending is sluggish due to the housing crisis and high gasoline prices.

It must be time for a rally in the stock market.

Stocks are sharply higher today, inspired largely by a report suggesting that things are, perhaps, not quite as bleak as they seem.

The major market measures are up 1 percent or more in midmorning trading.

The payroll company ADP reported that private employers in the United States added 189,000 jobs last month. That is more than three times some estimates by Wall Street economists. The Labor Department releases the November employment report on Friday.

The Labor Department, meanwhile, said today that the productivity of American workers rose at an annualized rate of 6.3 percent, up from 2.2 percent in the second quarter and the biggest gain since 2003.

"Every positive report buys us a little bit more time to work through some of the problems and avoid a recession," Bruce McCain, head of strategy for the investment management unit at Key Private Bank in Cleveland, told Bloomberg News.

Indeed, recession is on the minds of many on Wall Street.

Jan Hatzius, chief economist at Goldman Sachs, has warned that a tightening of credit could tip the U.S. into "a substantial recession."

On Tuesday, David Rosenberg of Merrill Lynch said, "The U.S. is on the precipice of its first consumer recession since 1991, which was the last time the market suffered from a confluence of high energy prices, weakening employment conditions, real estate deflation, and tightening credit."

A survey of the service sector today showed a slowdown. The Institute for Supply Management said that its nonmanufacturing index fell to 54.1 percent in November, down from 55.8 percent in October. The decline was greater than expected, although a reading above 50 percent still indicates an expansion.

Investors are counting on central banks to ease the credit crisis. Expectations are growing that the Federal Reserve may cut its benchmark interest rate by a half-point when policymakers meet on December 11.

In the Wall Street Journal, Greg Ip reported that some analysts say the Fed is more likely to cut rates a quarter-point and change its description so that the risks of weaker growth and higher inflation are equally balanced. The Fed could take other liquidity actions as well, he noted.

The Bank of Canada reduced rates on Tuesday, and the Bank of England may do so on Thursday. The European Central Bank also meets on interest rates on Thursday.

Today, the Reserve Bank of Australia left its benchmark rate of 6.75 percent unchanged.