The ADP and Challenger data on December job cuts are making the headlines this morning. The ADP number suggests that the payroll figures to be released Friday will be off-the-charts-negative, perhaps 600,000 job losses. The Challenger data showed corporate layoff announcements rose 275% from December 2007. Just to keep things in perspective, this chart shows that the Challenger number is far less scary than the headlines make it out to be. Indeed, the pace of layoffs actually slowed in December relative to November. And layoffs are far less today than they were during the peak of the 2001 recession.
Friday's job loss announcement will most likely be one of the worst in history, but things are always darkest before dawn. Just as with major asset repricings, which make unproductive assets once again attractive, big job losses set the stage for recovery.