Several companies announced layoffs yesterday that totaled more than 71,000 jobs lost - a horrific start to the week and a number that raised serious concerns that the manufacturing and retail sectors are in free fall:
The final week of January began with a bloodbath for the job market, as over 71,400 more cuts were announced on Monday alone.
At least six companies from manufacturing and service industries announced cost-cutting initiatives that included slashing thousands of jobs.
More than 200,000 job cuts have been announced so far this year, according to company reports. Nearly 2.6 million jobs were lost over 2008, the highest yearly job-loss total since 1945.
"It's all about the consumer, and the consumer's been hit hard," said Robert Brusca, chief economist at Fact and Opinion Economics. "It's a vicious circle as weakness begets layoffs, which beget more spending weakness."
Construction machinery manufacturer Caterpillar (CAT, Fortune 500) said Monday it will cut 20,000 jobs amid a "very challenging global business environment." The company had already planned to cut 15,000 workers since the fourth quarter of 2008, but added another 5,000, bringing the total to 20,000.
Pfizer (PFE, Fortune 500) said in an earnings report it would cut 10% of its staff of 81,900 and close five of its manufacturing plants. And a second round of cuts will shed about 15% of employees from the combined Pfizer/Wyeth staff of 120,000. That makes a total of 26,000 jobs lost. The company already cut 4,700 jobs in 2008.
Sprint, Home Depot, ING, Texas Instruments, and Deere and Company also announced massive layoffs.
No one is buying anything. Credit is hard to come by. It's as if the the economy has frozen in place. We're doomed! We're doomed! Right?
Not so fast:
Brusca said he agreed with many economists' predictions that the recession will end after the second quarter of 2009. Americans might feel the job market start to bounce back a bit sooner than expected, he said.
"These recessions are like geometry," Brusca said. "It looks like we'll have a V-shaped cycle, in that we're going into this with very sharp losses. This intense-phase recession will probably recover fairly quickly, with the job market coming out it at the same angle it came in."
In the short term, the economy and the job market are in trouble, Brusca said. But "it doesn't look like the bottom is falling out of the economy," he said.
And there's a silver lining to the gloomy clouds over America's economy.
"The good news is it's so bad right now that we will have a definite, noticeable recovery when it comes," Brusca said. "We're getting a lot of adjustment out of the way early.
It looks to me as if the economy is set to recover just about the time that Obama can claim his stimulus bill did the trick. In other words, if Obama and the Democrats had done nothing, saving us $850 billion, the economy would recover anyway. At least that's what a lot of economists are saying.
There still might be a few bumps in the road with the banking system. But as long as the Democrats don't make things any worse, they will no doubt get all the credit for reviving the economy despite the fact that if Congress had taken a long vacation and come back in September, things would get better anyway.
Yes, but think of all those unused condoms if we don't pass that stimulus bill...