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Challenger report: Job cuts soar to seven-year high



February 04, 2009 – Comments (0)


Forget about the employment report that ADP published this morning.  Those guys can't ever seem to get their ducks in a row.  They're constantly adjusting their reported job losses all over the place.  The ADP report looks in the rearview mirror anyhow.  In investing one needs to be forward-looking.  There is a much better and simpler way gauge what the jobs market is like in the United States right now.  Read the news.

The outplacement firm Challenger, Gray & Christmas does just that.  It tracks the number of officially announced job cuts by major employers that are out there.  According to the company, this number rose significantly in January.

So, just how bad was it?  U.S. job cut announcements exploded to 241,749 last month.  To put that number in context, it is the highest level in seven years, 45% higher than the previous month, and up 222% from January 2008.  Ouch.

Keep in mind that these layoffs have just been announced.  Many of them have not hit the official jobless totals yet.  The BLS is scheduled to announce its January employment report on Friday.  Regardless of what this "official" report shows, I expect the unemployment rate in the U.S. to continue to climb to near-double digit territory.

The jobs situation is going to get worse before it gets better.  The same likely goes for the housing market...unless the government comes out with some sort of massive intervention like 4% mortgages for everyone, which might put a temporary floor under things (but cause the deficit to grow even larger).

The economy and the stock market will likely bottom before the jobs situation does, but I don't personally expect either of those happen until 2010.

Challenger report: Job cuts soar to seven-year high


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