Pink slips are piling higher as companies scramble to cut costs even deeper to survive the country’s economic and financial storms.
Just days into the new year, managed care provider Cigna Corp., aluminum producer Alcoa Inc., data-storage company EMC Corp. and computer products maker Logitech International were among those announcing layoffs to cope with a recession that has just entered its second year. The flurry of job cuts suggest the employment picture will remain grim this year.
A barometer on layoffs is expected to show Thursday that the number of newly laid off people signing up for state unemployment insurance last week rose to 540,000, up from 492,000 in the previous week, according to economists’ projections.
The number of people continuing to draw jobless benefits is projected to stay near 4.5 million, demonstrating the troubles the unemployed are having in finding new jobs.
Electronic unemployment filing systems have crashed in at least three states in recent days due to the crush of newly jobless Americans seeking benefits.
"Businesses were panicked at the end of the year and those that had been holding off on layoffs are now capitulating," said Mark Zandi, chief economist at Moody’s Economy.com.
With jobs disappearing, shoppers held tight to their wallets and pocketbooks last month.
Michael P. Niemira, chief economist at the International Council of Shopping Centers, predicts retail sales out Thursday will show a drop for December and the worst holiday shopping season since at least 1969.
For all of 2008, employers likely slashed payrolls by at least 2.4 million. That’s based on economists’ forecasts for a net loss of 500,000 additional jobs in December, as well as the job losses already reported every month last year by the government. Some, however, think the number of jobs cut last month will be higher — around 600,000 or 700,000. The Labor Department will release that report Friday.
If the conservative, 2.4 million estimate of payroll reductions for 2008 proves correct, it would mark the first annual job loss since the previous recession in 2001. It also would be the worst year of job losses since 1945, when employers slashed nearly 2.8 million jobs. Though the number of jobs in the United States has more than tripled since then, job losses of that magnitude would be sober testimony to the nation’s economic woes.
With employers throttling back hiring, the unemployment rate is expected to jump from 6.7 percent in November to 7 percent in December, which would be the highest in 15-1/2 years. That figure also will be released Friday.
President-elect Barack Obama, who takes over Jan. 20, is proposing a mammoth $775 billion package of tax cuts and government spending over two years to revive the moribund economy. With add-ons by lawmakers, the package could swell to $850 billion, his advisers say.
Even with a big government stimulus, economists still believe the unemployment rate will keep climbing, hitting 8 or 10 percent by the end of this year. Obama’s economic advisers estimate that a $850 billion recovery package would lower the jobless rate to about 7.4 percent and create 3.2 million jobs by the first quarter of 2011.
Vanishing jobs, tanking home values and shriveled investments have forced consumers to cut back sharply on their spending. In turn, businesses have retrenched as well.
Consumers and companies are folding under the negative forces of the collapsed housing market, a global credit crunch and the worst financial crisis since the 1930s. The recession, which started in December 2007, already is the longest in a quarter-century.
The expectation of more job losses ahead "will only perpetuate the vicious downward cycle propelling the economy," said Bernard Baumohl, chief global economic at the Economic Outlook Group.