posted on Oct, 17 2008 @ 04:41 PM
The numbers I get say the US official rate is now 7%, but the unofficial rate is already double digits
By Scott Malone and Jim Finkle
BOSTON, Oct 17 (Reuters) - Shock waves from the global
financial crisis are now being felt in almost every corner of
working America as companies press the eject button on
increasing numbers of employees.
While the ax has been falling for months in the financial
and home-building industries -- where the current economic
downturn started -- as well as the Detroit auto industry,
makers of everything from soft drinks to water filtration
systems have unveiled hefty rounds of job cuts in recent weeks
as they brace for what some predict could become a long and
In the past week alone, companies including PepsiCo Inc
PEP and Danaher Corp DHR said they would lay off
thousands of workers, while the state of Massachusetts
disclosed plans to cut its payroll by 1,000 as it faces a tax
The situation is poised to worsen as the holidays approach
and many businesses scrutinize budgets for the coming year. The
sad truth is that Christmas layoffs are common in tough times.
"It's a fairly grim outlook," said Michael Goodman,
director of economic and public policy research at the Donahue
Institute of the University of Massachusetts. "I don't know of
any sector of the economy that will be spared."
A four-week moving average of new U.S. government jobless
claims last week hit its highest point in seven years.
Ed Yardeni, chief investment strategist for Yardeni
Research, is hoping that the U.S. government's $700 billion
bailout package will slow the job cuts.
"If this rescue plan doesn't work, then... you could see
something much worse that could feel like a recession or a
depression, with all sorts of people losing jobs," Yardeni
A survey of more than 100 chief financial officers and
other senior executives -- conducted Wednesday -- found 56
percent expect to reduce payrolls over the coming year. A
majority polled by CFO Magazine also predicted falling revenues
and plan to cut operating costs by at least 5 percent.
CUTS, FEAR SPREAD
Workers are scared. Some 47 percent polled last month by
Workplace Options said news of the financial crisis made them
fearful about job security, and 25 percent said they had begun
scanning help-wanted ads or updating their resumes.
"I'm being more conservative about spending -- I'm
concerned," said Donald Gaunt, a 52-year-old construction
worker from Smithville, Rhode Island, who said he has enough
work to last through the end of this year but wasn't sure about
2009. "It hasn't been this bad since the early 1980s."
Workers in the financial sector, as well as those involved
in home building and at the struggling Detroit automakers, have
already been hit by round after round of layoffs.
The failure of investment banks Lehman Brothers Holdings
Inc LEHMQ and Bear Stearns Cos resulted in tens of
thousands of people losing their jobs, but even banks that have
survived the crisis, including Bank of America Corp BAC and
Citigroup C, have cut head count dramatically.
General Motors Corp GM said this week that it would
close plants in Michigan, Wisconsin and Delaware and cut more
than 4,000 jobs.
The cuts are spreading into other sectors:
* PepsiCo on Tuesday said it would cut 3,300 jobs, almost 2
percent of its work force, in a bid to cut costs.
* Danaher, which also makes Craftsman tools, said on
Thursday it would lay off 1,000 workers and close 12 plants.
* Rockwell Automation Inc ROK said it would lay off
about 3 percent of its staff, or 600 people. That news came on
Sept. 30, the last day of the U.S. manufacturer's fiscal year.
* Textron Inc TXT, the world's largest maker of
corporate jets, said an unspecified number of jobs would be cut
as it scales back its financial operation.
* Leggett & Platt Inc LEG, which makes bed springs and
store shelving, said it was cutting back hours at some
factories and, in the words of Chief Executive Dave Haffner,
"must move to reduce staff. We are already doing so." It did
not disclose the number of jobs it plans to eliminate.
FEW OTHER CHOICES
Temporary employment may also prove harder to find.
Consumer electronics retailer Best Buy Co BBY, which
normally bulks up staffing in the holiday season, plans to cut
seasonal hiring by as many as 10,000 workers this year after
hiring about 26,000 in 2007.
"When we see job losses and rising unemployment, this does
not just affect those who lost their job," said Lawrence
Mishel, president of the partly labor-funded Economic Policy
Institute think tank.
"Wages grow more slowly when there's higher unemployment,
so the downturn will be affecting most working families through
reduced hours of work," said Mishel. "This is not something
that affects a small part of the workforce."
With the pace of layoffs picking up, the cycle becomes a
vicious one, pressuring consumer spending and hurting home
values yet again.
"As people lose their jobs, they cut back on their
consumption, and people are less able to afford their
mortgages, which are already strained," said Ron Blackwell,
chief economist at the AFL-CIO, the largest U.S. labor
federation. "And so people lose their houses, which continues
to aggravate the financial problems. So it's reinforcing in
that way and it's also spreading.
"This recession -- and I didn't see it this way a month ago
-- is going to be global in scope," Blackwell said.
(Additional reporting by Nick Zieminski in New York; Editing
by Brian Moss)
((Boston.Newsroom@thomsonreuters.com; +1 617-856-4342; Reuters
Keywords: USA CORPORATE/LAYOFFS
Fri Oct 17 20:42:41 2008 -GMT- pnac (nN15529306) = 1 20:42
Keywords: USA CORPORATE/LAYOFFS