Jobs and Corporate Cash

The market correction has clearly challenged the validity of growth forecasts. The 14.5% drop in stock prices that has occurred since April may have been ignited by worries about European sovereign debt, but it is now being fueled by anxiety about the pace of economic growth.

Friday’s jobs data will provide more insight. Though forecasts are often wrong, the disappointing monthly ADP National Employment Report is not inspiring confidence for a positive surprise from the Labor Department, particularly as far as non-governmental hiring is concerned. Alan Levenson, T. Rowe Price’s chief economist, predicts an increase of 90,000 in private jobs and a decrease of 130,000 in total nonfarm payrolls. (Both numbers are notoriously hard to project. Total nonfarm payrolls will be skewed by the termination of temporary census jobs.)