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Market Insider: Jobs Report ‘Is Going to Be Pretty Ugly’

Patti Domm
CNBC [1]
Friday, Nov 7, 2008

Friday’s jobs report goes right to the heart of what’s ailing the markets.

It’s the fear that the economy is weaker than many are forecasting—and rising unemployment will only make it worse.

October’s employment report is scheduled for release at 8:30 am EST. The consensus is for a loss of 200,000 non-farm payrolls, but some economists are ratcheting up their estimates to a decline of as many as 300,000 jobs.

“It’s going to be pretty ugly,” said Mark Zandi, chief economist at Moody’s Economy.com. “The ISM surveys were very negative. The employment questions were very, very negative. It feels like it could go to 300,000 plus.”

Mesirow Financial’s chief economist Diane Swonk said she expects a decline of 250,000. Jobs have declined by a total 760,000 in the first nine months of the year.

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Zandi said he expects the unemployment rate will move to 6.3 percent from 6.1 percent, and he expects it to peak at 8 percent at the end of next year. A wide variety of companies have been announcing cost-cutting plans that include significant layoffs in the last couple of weeks.

“They feel the panic and they know that things aren’t getting better any time soon so they’re battening down the hatches in preparation,” Zandi said.


Other economic news Friday includes pending home sales at 11:30 a.m. and wholesale inventories at 10 a.m.

The auto industry, which went hat in hand to Washington Thursday, has two major earnings reports Friday. Ford reports before the bell, and General Motors reports later in the morning. GM is also expected to make an operational announcement, aimed at preserving cash.