U.S. Businesses Slash Jobs; Consuming Spending Stalls

Discussion in 'Economics' started by ByLoSellHi, Oct 25, 2008.

  1. "Steel Makers to Shut 19 Out of 27 Blast Furnances In The United States."

    If that doesn't tell you how incredibly weak the fundamental, underlying economy is, I can't imagine what would.


    Spending Stalls and Businesses Slash U.S. Jobs

    Rochelle and Dwight Stokes of Phenix City, Ala., have both lost their jobs recently.

    Published: October 25, 2008

    As the financial crisis crimps demand for American goods and services, the workers who produce them are losing their jobs by the tens of thousands.

    Layoffs have arrived in force, like a wrenching second act in the unfolding crisis. In just the last two weeks, the list of companies announcing their intention to cut workers has read like a Who’s Who of corporate America: Merck, Yahoo, General Electric, Xerox, Pratt & Whitney, Goldman Sachs, Whirlpool, Bank of America, Alcoa, Coca-Cola, the Detroit automakers and nearly all the airlines.


    When October’s job losses are announced on Nov. 7, three days after the presidential election, many economists expect the number to exceed 200,000. The current unemployment rate of 6.1 percent is likely to rise, perhaps significantly.

    “My view is that it will be near 8 or 8.5 percent by the end of next year,” said Nigel Gault, chief domestic economist at Global Insight, offering a forecast others share. That would be the highest unemployment rate since the deep recession of the early 1980s.

    Companies are laying off workers to cut production as consumers, struggling with their own finances, scale back spending. Employers had tried for months to cut expenses through hiring freezes and by cutting back hours. That has turned out not to be enough, and with earnings down sharply in the third quarter, corporate America has turned to layoffs.

    “People have grown very nervous,” said Harry Holzer, a labor economist at Georgetown University and the Urban Institute, tracing cause and effect. “They have seen a lot of their wealth wiped out and as they cut back their spending, companies are responding with layoffs, which hurts consumption even more.”


    The unemployment is widespread, with Rhode Island the hardest hit.

    For Dwight and Rochelle Stokes of Phenix City, Ala., the layoffs are a family event. He lost his job two weeks ago as an aviation mechanic at the Pratt & Whitney jet engine facility near his home — a few days after his wife lost hers as a cosmetologist at Great Clips, a family-owned barbershop and beauty salon.

    “It got really slow in July and August,” Ms. Stokes said. “I would sit there for two hours, and some days we had only 10 clients, four of us for 10 clients.”

    The broadening layoffs are most pronounced on Wall Street, in the auto industry, in construction, in the airlines and in retailing. The steel mills, big suppliers to many sectors of the economy, are shutting 17 of the nation’s 29 blast furnaces — a startling indicator of how quickly output is declining as corporate America struggles to adjust to the spreading crisis.

    “We have seen a softening order book in the most dramatic ways in the last week,” said Tom Conway, a vice president of the United Steelworkers of America, adding that layoffs in the industry “are just starting now.”

    In September alone, 2,269 employers each laid off 50 people or more, the Bureau of Labor Statistics reported, up sharply from the spring and summer months, and the highest number since September 2001, when the aftermath of the 9/11 attacks coincided with a recession to spook employers. A spike in 2005 was related to Hurricane Katrina.

    The financial services industry has been cutting jobs since last summer, when the credit crisis took hold. By some estimates, 300,000 jobs will disappear from banks, mutual fund groups, hedge funds and other financial services companies before the crisis subsides — 35,000 of them in New York.

    Goldman Sachs alone, among the best performers on Wall Street, has announced plans to cut 10 percent of its work force, which stood at 32,594 at the end of last month.

    The current unemployment rate, 6.1 percent — up more than a percentage point since April — is still relatively mild by post-World War II standards. The highest level since the Great Depression, 10.8 percent, came in November and December of 1982 as the economy was shaking off a severe recession.

    The unemployment rate hit 9 percent during the mid-1970s recession, and 7.8 percent in the 1990-1991 downturn. The next peak, 6.3 percent, occurred in June 2003, during a long jobless recovery in the aftermath of the 2001 recession.

    Dwight and Rochelle Stokes, both in their late 20s, have just joined the layoff rolls. So has Mr. Stokes’s father, Warren, 48, who lost a $30-an-hour job this month on the assembly line of the Chrysler truck plant in Fenton, Mo., near St. Louis., where the father had worked for 12 years. “They just cut back,” the son said.

    Just a year ago, he and Rochelle, and their two very young children, moved to Phenix City from Fenton so he could take the mechanic job at the Pratt & Whitney plant in nearby Columbus, Ga. Airlines send engines there for periodic overhauls, and when Mr. Stokes arrived 400 workers were tearing down and rebuilding 15 engines a month.

    But as the airlines reduced their flights — and announced 36,000 job cuts, nearly all of them taking place in the current fourth quarter — that number fell to three engines this month and “it was going to be worse for November, just one or two,” Mr. Stokes said.

    “We came in on Monday morning and our supervisor told us not to touch an engine, and we knew there would be layoffs,” he said. By lunchtime, Mr. Stokes and 100 others had been escorted out of the building, with four weeks’ pay as severance, along with four weeks of health insurance and a $1,000 departure check.

    As a starting mechanic, Mr. Stokes’s pay, $11.50 an hour, was just over half of what he had earned as the manager of a chain of pawn shops in Missouri. But he took the job anyway, moving with his family, because Pratt & Whitney offered full college tuition. Mr. Stokes immediately enrolled in Embry-Riddle Aeronautical University to pursue a bachelor’s degree in management and a minor in engineering sciences.

    Using all his spare time, he had earned half the necessary credits when the layoff came. The severance included extended tuition, and Mr. Stokes, piling on course work, hopes to earn his degree by early summer. But he will do so by correspondence course; the family is returning to Missouri, moving in rent free with Mr. Stokes’s sister in Fenton.

    “I am going to take seven or eight courses and hurry up and get my degree, and my wife will go back to cutting hair,” Mr. Stokes said, “and when I have my degree in June, I’ll apply for a management position. Even though things are bad, I hear there are openings in St. Louis requiring a bachelor’s degree.”
  2. Energy


    As our country sinks deeper and deeper into financial crisis little is being said about the direct link of our dependence on foreign oil. The exorbitant cost of fuel has strained every aspect of our economy. It doesn't stop at filling up the family vehicles to get back and forth to work and tend to the necessities, as if that were not enough of a sucker punch to our budgets. Utility bills have also seen record rate hikes to cover their increased production costs. Every consumer product has seen sharp rises in both production and shipping costs that are readily passed on to us. Manufacturing companies are finding clever ways to try to conceal the fact that they are making products in smaller packages yet they are costing us more. Who would have thought that the term "half gallon of ice cream" would become an oxymoron of sorts in 2008 as most "half gallons" are a pint low now? There is little to no money left over for savings or investing. Jobs and homes are being lost at a record high rate. School districts are strained as to how to make up the budget deficits as the transportation departments now eat a huge chunk of available funds just gassing up the buses. Police departments are trying to offset the additional costs of keeping cruisers on the road. Even animal shelters are feeling the strain as pets are being surrendered in record numbers due to the economy.

    We have many natural resources of energy that could be easily tapped such as wind, solar and wave. We also have many advanced technological resources available such as hybrid cars; plug in cars, and alternative fuels. There is obviously no easy and fast solution but we need to be proactive as a nation to devise a plan to incorporate all that is available to us to get ourselves out from under the iron grip of our dependence on foreign oil. We continue to pump hundreds of billions of American's hard earned dollars overseas to countries that hate us with each gallon of their oil we pump. We act dumbfounded as we are swept up in our economy as it goes down the tubes. We are an intelligent nation; we are a technologically advanced nation. We are a nation with the resources we need to end this but we are a nation without a plan.

    Our quick fixes have not work. We spent 168 BILLION borrowed dollars on the last economic stimulus package. What DID that do for our economy really? Now Bernake wants to hand out another one. Wouldn't it be a better idea to invest that money in free energy sources and get that up and running. Imagine what we could accomplish with 168 Billion dollars. Who comes up with these plans anyway?

    I read a new book by Jeff Wilson called "The Manhattan Project of 2009." What an eye-opener! Every member of congress needs to open their eyes and read this book too!
  3. achilles28


    I know for fact, up here in Ontario (Canada), the Steel industry is hurting...big time.

    Major plants are at ~50% capacity.
  4. That's what happens when you listen to the little NAG NAG NAG NAG and have her plop you out some crumb crunchers.
  5. Interesting, the family has smiles from Ear to Ear.

    Hummm, a bit diffrent than the photo's we see from the 1929 erra.

    How come all these "Sheeople" are being laid off, but each and every photo of them in the press, they have a huge smile?

    Propaganda folks? Could this be the liberal media trying to convence the Sheeople of American to vote a OBAMANATION in to play?

    Give me a fu#) break. These two just lost their jobs and they are happy, like pigs in shit?

    Wake up idiots. Read between the lines.
  6. achilles28



    NY Times probably cut'em a check for 10K. Say Cheese!
  7. Every country gets the government it deserves, good and hard!

    We asked for Obama and we will get Obama. RIP America.
  8. It's the digital photography, it's a lot better than the old film technology..
  9. You're as bad as the 9/11 CTers.

    Great, now we have more fruitcakes. left, right and center.

    Why don't you call the people quoted and ask them if their story is true? If you break the case, you'll be famous...your name will be all over Sludge/Drudge...
  10. You nailed it!
    #10     Oct 26, 2008