24/7 Wall Street
September 12, 2008
The evidence that sales at many companies are struggling and that employment will suffer are almost everywhere. Recently, a division of GMAC said it would let 5,000 people go. According to MSNBC, “Job cuts announced by U.S. employers last month jumped 12 percent over a year ago to cap the busiest summer of downsizing in six years.” Job cuts through October could top what they were for all of 2007.
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The economy is beginning to look like it did during the deep recessions in the early 1990s and 1973. Eric Rosengren, the president of the Boston Federal Reserve Bank, sees the situation getting much darker in the second half. Speaking of deteriorating financial conditions he said, “It may push the unemployment rate up to 6%, with more than 2 million people losing their jobs since the financial turmoil began last summer.”.
If the economy tips closer to what it looked like in ’73, unemployment could be closer to 8% or 9%.
Several large companies will almost have to cut employment. Most are industries which are already in trouble. Some will simply drop people because they have become more efficient at running their businesses or they can “export” jobs to China and India to save money.
Banks and car companies have fired hundreds of thousands of people recently. Bear Stearns fired over 7,000 people as it was bought by JP Morgan (JPM). Washington Mutual (WM) laid off 3,000 people earlier this year. As Countrywide was taken over by Bank of America (BAC) thousands more lost work.
This is the 24/7 Wall St. list of companies that will have to cut jobs, probably over 10,000 in each case, to make ends meet or improve earnings between now and the end of 2008.
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