From the WSJ:
Spreading layoffs could further exacerbate weakness in consumer spending, the largest driver of U.S. economic growth, and delay any recovery. "A weak labor market makes consumers and businesses even less creditworthy and causes lenders to pull back even further," says Barclay's Mr. Pandl.
While this is pretty basic stuff, it's important to reiterate why job losses are so important. No job = no money = no spending. This is vitally important because consumer spending accounts for 70% of US GDP growth.
Many manufacturers, meanwhile, says they have seen a sudden drop in orders and are quickly moving to cut jobs to avoid building up inventories. Makers of construction machinery, powerboats, appliances and copper pipe are among those shedding workers.
This shouldn't be too surprising. As the world slows down people will by less stuff. Less stuff purchased = less need to make more stuff.
Meanwhile, at the center of the economic crisis, financial companies continue to lay off thousands of workers. Cleveland-based National City Corp. said this week it would eliminate 4,000 jobs, or 14% of its work force. Goldman Sachs Group Inc. is preparing to lay off 10% of its 32,500 employees, according to people familiar with the matter. And Bank of America Corp. is expected to lay off thousands of workers as it completes its acquisition of Merrill Lynch & Co. The financial-services industry has lost 172,000 jobs since December 2006, according to the Labor Department.
The financial industry is in big league turmoil; shedding jobs shouldn't be surprising.
In another ominous sign, UPMC, the big Pittsburgh-based hospital system, said this week it was laying off 500 employees as part of continuing cost-savings initiatives. The layoffs are almost entirely "nonclinical" and are coming from all parts of the hospital network, which employs about 50,000.
Uh-oh. Health care -- a reliable growth for jobs -- is shedding them. That's not good.
Drug makers, which have been paring costs for years, are now broadening the scope to include executives and researchers.
Merck, which has eliminated 10,400 jobs over the past three years, said Wednesday it will cut 7,200 positions, or 12% of its work force, by the end of 2011. The layoffs will touch every part of the company, from sales representatives to researchers, and a quarter will be mid- and senior-level executives. The company is closing labs in Seattle, Japan and Italy.
Chief Executive Richard Clark said the latest cost-cutting wasn't a reaction to the company's 28% decline in third-quarter profit but part of longstanding efforts to reposition Merck for a new era.
The drug makers are cutting -- that's also not good. It indicates there are concerns every where right now.
In a sign of weakness in the consumer economy, Coca-Cola Enterprises, the world's largest soft-drink bottler, said on Thursday it has laid off more than 1,000 people, primarily from management ranks, in its North American operations since Labor Day. The bottler has been struggling to revive soft-drink sales in the U.S.
Not good at all.