The forecasts are all over the place with CNBC suggesting the worst in 34 years (they also have the ING worst case 1 million story) and MarketWatch is saying this may be the worst since WWII. If the numbers are worse than around 500,000 the market could suffer. Complicating the environment on Wall Street are hints of bad earnings reports but that should hardly be a surprise. Whether the market will take it all in stride or plunge into panic mode is another story.
U.S. businesses cut jobs at a rapid pace again in December, analysts say, worsening a trend that could produce the largest quarterly job loss since America demobilized its war economy after beating Hitler.
The Labor Department will report on December's nonfarm payroll report on Friday at 8:30 a.m. Eastern, with economists surveyed by MarketWatch expecting payrolls to fall 500,000 after the 533,000 loss in November. See Economic Calendar.
December's loss could be much worse, some economists believe. Following the news from payroll firm ADP that its revised private-sector job index fell by 693,000 in December, some economists sharply lowered their forecasts for the payrolls number. Ian Shepherdson, chief domestic economist for High Frequency Economics, said payrolls could fall by 700,000, the worst in 60 years.
Other economists were sticking to their slightly less-horrible forecasts. "Labor market conditions are deteriorating at a rapid clip, and we look for another sizeable drop in payrolls," said David Greenlaw, an economist for Morgan Stanley, who continued to look for a loss of 450,000. "However, we are discounting the results of the ADP survey."
For the fourth quarter as a whole, the median expectation is for payrolls to fall by 1.35 million, the worst since 1945. Global business and consumer confidence, already weak, plunged abruptly after the collapse of Lehman Bros. and the rescue of AIG and Fannie and Freddie in September, said Jay Feldman, an economist for Credit Suisse.
For all of 2008, employment likely fell by 2.41 million, the most since 2.75 million jobs were lost in 1945 and exceeding the 2.1 million lost in 1982.
